Qualcomm in China JV to break Intel's hold on server chip sales
It will take a 45% stake in a new company being formed with the government of Guizhou Province
San Francisco
QUALCOMM INC, trying to break Intel Corp's dominance of chip sales for server computers, is forming a joint venture in China, the fastest growing consumer of data-centre hardware.
The San Diego-based chipmaker will take a 45 per cent stake in a new company being formed with the government of Guizhou Province. The new venture will develop server chips for the Chinese market using Qualcomm designs and technology.
"We felt the fastest way to participate in China was through a joint venture," said Anand Chandrasekher, who heads Qualcomm's fledgling server unit. "We view the China market as the second-largest server market in the world by 2020 and it's the fastest-growing market already."
Qualcomm has a long way to go. The biggest maker of mobile-phone chips is one of many challengers seeking to dislodge Intel in the lucrative market for powerful processors that run data centre machines.
Intel, the biggest overall semiconductor maker, has squashed all opposition and enjoys more than 99 per cent market share. It's able to charge more than US$7,000 for some models, more than seven times the price of even its most expensive desktop offering.
While the Qualcomm-Guizhou joint venture's initial products will essentially be the same as the US chipmaker's forthcoming offerings, over time it will seek to customise chips for local customer needs, according to Mr Chandrasekher.
Qualcomm is seeking to expand outside of its core smartphone chip market, where it's facing increasing competition and declining sales. Last October, the chipmaker started sending out samples of a server chip to prospective customers. That market will be a US$15 billion opportunity for the company by 2020, including US$6 billion from China, Mr Chandrasekher said.
Companies such as Applied Micro Circuits Corp and Advanced Micro Devices Inc are trying to loosen Intel's stranglehold with chips based on designs from ARM Holdings Plc, a technology that Qualcomm uses. They have argued that ARM designs are more power efficient and cheaper, and will help Intel's customers get better pricing. BLOOMBERG
