Qualcomm Eyes Server Market Again As Smartphone Market Cools Down; Amazon Could Be A Potential Client

  • Qualcomm Inc QCOM took another run at the server processors market to tap a $28 billion industry and decrease its reliance on smartphones, Bloomberg reports.
  • Qualcomm sought customers for a product stemming from last year's purchase of chip startup Nuvia. 
  • Leading server chip buyer Amazon.com Inc's AMZN AWS business has agreed to look at Qualcomm's offerings.
  • Also Read: EXCLUSIVE: Qualcomm CFO Says Company Is 'Naturally Positioned' To Benefit From The Digital Transformation: 'The Opportunity In Front Of Us Is Unlimited'
  • CEO Cristiano Amon aimed to turn Qualcomm into a broader provider of semiconductors rather than just the top maker of smartphone chips. 
  • Qualcomm has Nuvia, staffed with chip designers from companies like Apple Inc AAPL
  • Amon, who acquired the business for about $1.4 billion in 2021, saw it help revitalize Qualcomm's high-end offerings for smartphones and personal computers. 
  • The move implies Qualcomm has a much bigger-ticket item to sell. The highest-end server processors carry prices of more than $10,000 per chip.
  • Spending on cloud computing infrastructure as Amazon, Alphabet Inc GOOG GOOGL Google, and Microsoft Corp MSFT used to whisk data totaled $73.9 billion in 2021 as per IDC.
  • According to Bloomberg analyst Mandeep Singh, data-center processors generate $28 billion a year. 
  • "Qualcomm's re-entry to the Arm server market broadens its reach into one of the bright spots in semiconductors," he said.
  • Giant cloud data centers are increasingly embracing processors using designs from Qualcomm's essential partner SoftBank Corp SFTBY Arm Ltd to Intel Corp's INTC dismay.
  • Amazon has addressed the power consumption issue of data centers by building its chips based on Arm designs. 
  • But Amazon also still uses chips from Intel, Advanced Micro Devices Inc AMD, and Nvidia Corp NVDA, with Qualcomm seeing an opportunity to carve out a niche among those suppliers.
  • Qualcomm's previous attempt to tap the market failed due to a critical executive exodus.
  • Price Action: QCOM shares traded lower by 1.22% at $149.54 premarket on the last check Friday.
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