Qualcomm quashes rumours that it was leaving the server chip market

Last month, Qualcomm was reportedly set to leave the server chip market in a bid to drastically cut costs and please its investors. It seems that this rumour was blown out of proportion, as the chipmaker has insisted that it will continue to make ARM-based chips specifically for data centres.

Qualcomm's president Cristiano Amon revealed the news in an interview with Reuters, asserting that while the chipmaker might be making changes, its server chip business is not at risk of shutting up shop. “We are not looking at strategic options. We are not selling. We are still focused on it.”

The rumour arose in May, when sources supposedly close to the situation told Bloomberg that Qualcomm was considering removing itself from the server chipset market by selling its division or closing it down completely.

What made the rumours particularly believable is the sheer amount of competition that stands against Qualcomm, as Samsung has dethroned Intel as the world’s largest chipmaker earlier this year. Intel still remains strides ahead of its closest competition, controlling a hefty 90 percent of the world’s desktop PCs and leading the server chip market.

Currently, Qualcomm is reliant on its position in the mobile chip market with its Snapdragon SoCs, which puts the chipmaker in a vulnerable position given the slowing sales of smartphones. Its expansion into data centre territory was a bid to remove its reliance on a singular market, however Qualcomm has relentlessly struggled to find a foothold.

While Qualcomm has declined to comment on whether the company has indeed considered selling its server chip unit, it is believed that the company placed its underwhelming server chip business in the firing line when it was forced to refocus its efforts on quelling a hostile takeover from its rival, Broadcom.

The logic behind this, is that if the company became more profitable and reduced its spending, investors would be more inclined to keep the company independent. Luckily, US officials stepped in and prevented the takeover from happening before Qualcomm made any big changes.

Moving forward, Amon told Reuters that it will be making changes by rolling its server chip division into its Qualcomm CDMA Technologies unit, which focuses on the designing and selling of mobile chips. Its new focus will be on large cloud computing, partnering with Chinese companies such as Chinese internet giants such as Alibaba Group Holding Ltd, Tencent Holdings Ltd and Baidu Inc.

“It’s very clear to us that the ARM opportunity is focused on a few players where you don’t have the software x86 barrier to entry,” concluded Amon.

KitGuru Says: At the very least, if Qualcomm can offer something different to Intel, AMD and Samsung, it might have a chance at boosting its market share. Hopefully the changes will help keep Qualcomm a valid player in the chipset market amidst the slowing sales of handsets.

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