AMD Plans to Use ARM Designs in Chips for Servers in 2014

Advanced Micro Devices Inc. (AMD), seeking a way to regain server-processor sales lost to Intel Corp. (INTC), said it will start using ARM Holdings Plc (ARM) technology in some products, an effort to gain ground in the data-center market.

AMD will begin offering 64-bit processors based on ARM’s designs in 2014, Chief Executive Officer Rory Read said at a company event in San Francisco yesterday. The Sunnyvale, California-based chipmaker will also offer processors that combine ARM technology with designs from startup SeaMicro Inc., which AMD acquired earlier this year.

AMD, whose market share in servers has slipped to less than 5 percent, is turning to ARM designs to differentiate itself from larger rival Intel and win customers for data center chips. ARM, which leads in the mobile-phone and tablet market, is upgrading its technology to try to provide energy-saving alternatives for the powerful computers used by companies such as Google Inc. and Facebook Inc.

Intel now accounts for about 95.5 percent of the market for server chips, according to Mercury Research, with AMD holding the remainder. AMD joins a growing list of companies, including Samsung Electronics Co., Oracle Corp. (ORCL) and Nvidia Corp. (NVDA), that are developing ARM-based chips for servers, according to Gus Richard, an analyst at Piper Jaffray & Co.

Makers of server machines are seeking a greater variety of chip choices, AMD’s Read said in an interview.

Status Quo

“The status quo isn’t good for anyone, apart from one company,” said Read.

AMD, unlike other potential ARM-technology chipmakers, already has expertise in the server market, while SeaMicro’s chips connect processors together so they work more efficiently, Read said.

After Intel, AMD is the biggest maker of PC chips on Intel’s x86 technology. A partial defection by AMD to ARM adds to backers of that technology. Qualcomm Inc. (QCOM) and Nvidia are already using tablet processors to try to break into the personal-computer market, bolstered by an update of Microsoft Corp.’s Windows operating system that is compatible with ARM designs for the first time. That version went on sale last week.

AMD is the worst performer on the Philadelphia Semiconductor Index (SOX) this year, with a decline of 62 percent. That compares with a drop of 9.5 percent for Intel so far in 2012.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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