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

ARM Holdings Plc (ARM), designer of the most popular chips for smartphones, introduced a new line of faster, more energy-efficient processors for handsets and to expand in the server market dominated by competitor Intel (INTC) Corp.

“We don’t expect this to be like a switch going on over night and suddenly every server in the world is ARM,” Chief Executive Officer Warren East said in San Francisco today. A reasonable target would be a 20 percent share of the market by 2020, he said.

Partners for the Cortex A50 chip designs, which will appear in devices as soon as 2014, include Advanced Micro Devices Inc. (AMD), seeking to regain server-processor sales lost to Intel, Samsung Electronics Co. (005930) and Broadcom Corp. (BRCM), the Cambridge, England-based company said today. ARM is adding an ability to process data in 64-bit chunks, which is crucial for servers. Intel server chips made this transition more than five years ago.

The new design will offer processing power three times faster than currently available technology and will help data centers use less energy, ARM said today. The company, whose chip designs can be found in Apple Inc. (AAPL)’s iPhone and devices that run on Google Inc.’s Android operating system, is now trying to provide options for the powerful computers used by companies such as Google and Facebook Inc. (FB)

Power Demand

“We’re finding people building these huge data centers with lots of racks empty because they can’t get the power,” East said. “If we don’t change the way in which we process the data here, then a 10 times increase in the amount of data means a 10 times increase in the amount of power used.”

AMD will begin offering 64-bit processors based on ARM’s designs in 2014, CEO Rory Read said at a company event in San Francisco yesterday. Makers of servers are seeking a greater variety of chip choices, Read said in an interview.

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. 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.

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

Intel now accounts for about 95.5 percent of the market for server chips, according to Mercury Research, with AMD holding the remainder.

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. (MSFT)’s Windows operating system that is compatible with ARM designs for the first time. That version went on sale last week.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net

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