Reuters has published an interview with Qualcomm President Cristiano Amon — focusing on the media reports about the possible exit of the semiconductor company from the data center business.
Here are the main facts:
First, Qualcomm has no plans to stop its efforts to create processors for data centers. The US-based chipset company does not have any plan to sell or exit from data center processor unit.
Qualcomm is the largest maker of chips in mobile phones. It last year launched chips that use technology from Softbank Group’s ARM Holdings to power computer servers behind cloud-based services such as social networks.
Second, Intel dominates data centers and draws half of its revenue from servers and other data centric chips.
Third, Qualcomm is making staff reductions in the unit. There will be a narrower focus on large internet companies in the United States and China.
Fourth, Qualcomm is considering cost-cutting options in areas that are not central to Qualcomm’s business, which overwhelmingly comes from selling chips and licensing technology for mobile phones.
Fifth, the server chip business will be rolled into Qualcom’s Qualcomm CDMA Technologies unit, which designs and sells mobile phone chips, to gain cost efficiencies.
Sixth, the restructured server chip unit will focus on large cloud computing players. It aims to sell to Chinese internet giants such as Alibaba Group Holding, Tencent Holdings and Baidu through a joint venture in China.
Seventh, large internet companies tend to write much of their own internal software and can customize it for Qualcomm’s chips. That means they will not struggle like smaller players to adapt off-the-shelf data center software that is overwhelmingly written to run on Intel’s so-called x86 chips.
Eighth, Qualcomm believes that the ARM opportunity is focused on a few players where you don’t have the software x86 barrier to entry.