For the better part of last month, Qualcomm made headlines with rumors that it was planning to exit the data center business. The exit would mean that the idea of Centriq processor is abandoned. The ARM-based 48-core chip was designed to Intel from dominating the server market. This may be surprising news given that the company has spent many years working on the chip. The chip had been on the market for a few months.
Reducing its workforce
According to a report by Bloomberg, Qualcomm is preparing to reduce its work force in the data center unit by half. Bloomberg says it got information about the proposed layoffs from the filings the company made in North Carolina and California. Recently the company lay off 1,500 workers.
Why Qualcomm is backing out
According to Bloomberg, the company has taken the step after failing to penetrate the market, which is dominated by Intel. With a saturated market, the company’s future prospects in the data center business are very minimal. Intel commands 99% of the enterprise server market.
In what could be seen as change of strategy, the division will now shift supply of chips to some of the leading operators of cloud computing centers. The company is also targeting the Chinese market, where the company has several partnerships.
THE HERALD FINANCE REPORT
Start your workday the right way with the news that matters most.
In a statement, Qualcomm President Cristiano Amon said that the company is still committed to tapping into the data center field. He noted that although the company is reducing its investment in the sector but remains committed to the Chinese market. Additionally, the company is focusing on research and development so as to tap into future opportunities.
The main beneficiary of Qualcomm exit is Cavium, which will now remain the only player in the ARM server business. Recently Cavium completed the deployment of the biggest ARM-based supercomputer, Astra, at Sandia National Labs.
Qualcomm’s ambitions became dimmed after plans to acquire a stake in ARM Holdings Plc failed. Several chipmakers have been targeting major operators of large data centers. ARM’s technology is mainly used in smartphones and has not been extensively used in computing.