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Qualcomm planning cost-saving exit from ARM server CPU development, according to reports

Qualcomm is considering giving up on developing ARM-based server CPUs just a year after pushing into the area. 

That’s according to a report from Bloomberg, citing “people familiar with the situation”, who claim that Qualcomm is considering pulling out of a market already dominated by Intel and IBM.

Qualcomm’s original push into the data centre world was prompted by a mission to get ARM-based CPUs into servers for high-end computing. 

It is an area that rakes in large sums of money per individual chip, but they sell in considerably smaller volumes than they do in smartphones and other consumer smart gadgets.

The company started with the release of its Centriq 2400 chip last year, which took ARM’s architecture and was intended to challenge Intel’s Xeon processors. While Microsoft was believed to be interested in the chip, Qualcomm has remained tight-lipped over whether it’s been selling many of them, which presumably means that it isn’t. 

The San Diego, California-based chipmaker hasn’t commented on its potential abandonment of the ARM server chip market. But in discussing its latest earnings report, chief financial officer Steve Mollenkopf told analysts that Qualcomm is reducing its spending on areas of its business that aren’t core drivers of revenue for the firm.

As such, this means that the company will almost certainly be taking a long, hard look at the level of investment that will be required to tackle this market, as against the mobile and connectivity-focussed market sectors where it is currently strongest. Investments in 5G, presumably, will take priority. 

In recent years, Qualcomm has come to dominate the market for mobile CPUs for the smartphone and small devices sectors, with Qualcomm’s Snapdragon line the market leader.

But the chipmaker could equally be seen as over-reliant on the smartphone market. If the market for mobile suddenly tumbles so will Qualcomm’s revenues; hence, a bit more diversification might be beneficial.

At the same time, Intel is facing renewed competition in servers from AMD, which has become a serious challenger, once again, following the introduction of Ryzen and Ryzen 2 CPUs. 

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