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ARM Plans to Challenge Intel’s Server Chip Dominance in 2014

ARM Plans to Challenge Intel’s Server Chip Dominance in 2014
ARM’s chip architecture powers Apple Inc.’s iPhone and the Sony Ericsson Xperia X10 using Google Inc.’s Android software. Photographer: Chris Ratcliffe/Bloomberg

ARM Holdings Plc, the top designer of processors for smartphones, is pushing into chips for server computers and aims to start eroding Intel Corp.’s dominance in that market in 2014.

Server manufacturers are already looking at chips based on ARM’s technology, Chief Executive Officer Warren East said last week in an interview. The designs will help create lower-power computers, which will make data centers more efficient. Still, the effort will take years to bear fruit, he said.

“Work is under way: System designers are actively considering ARM architectures,” said East, whose company is based in Cambridge, England. “We don’t want to raise expectations that next year there are going to be a lot of ARM servers. Of course, there aren’t.”

ARM and Intel are encroaching on each other’s turf. Intel, which accounts for about 90 percent of the processors in servers, is attempting to parlay that strength into the handheld-device market. After a decade of trying to break into phones, Intel says its chips will begin appearing in models by the second half of next year.

ARM customers are tackling the server market by adapting its latest mobile-phone chip design, which debuted in September. ARM’s Cortex lineup is the basis of chips that power Apple Inc.’s iPhone, as well as devices using Google Inc.’s Android software.

Stock Run-Up

ARM shares have more than doubled in value this year, spurred by the explosion of smartphones using its technology. Qualcomm Inc., Texas Instruments Inc. and Samsung Electronics Co. all rely on ARM’s chip designs in processors for phones.

By freeing ARM-designed chips from the constraints of a battery -- a limitation they face in portable devices -- they can run fast enough to power servers, East said. And because they were designed from the ground up to work on battery power, they’re more energy-efficient than Intel chips and aren’t as hot, he said.

“We could certainly halve the power of these things,” East said. As data centers get packed more tightly with computers and chips, “the challenge is delivering the energy and taking the heat away.”

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