Qualcomm Inc. (QCOM), the largest global manufacturer of wireless chipsets, is planning to enter the server market with new server chips based on ARM Holdings plc technology. The company is trying to build on its strength in high-end mobile phones and dwell into new areas like server chips, using the processor architecture it has developed for mobile devices like smartphones and tablets. Qualcomm is thus eyeing diversification into the data center market buoyed by its state-of-the-art semiconductor technology.
This would bring Qualcomm in direct competition with Intel Corporation (INTC) – one of the world’s largest chip makers for computers and Advanced Micro Devices, Inc. (AMD) – the world's second largest manufacturer of microprocessors. The company might as well pose a threat to other smaller ARM server chip makers.
Notably, big technology companies such as Google Inc. (GOOGL) build their own servers to serve their own individual data center needs. Qualcomm would thus likely want to benefit from its relationship with Google by helping the latter build server chips in addition to mobile chips. Qualcomm has, to date, shipped cumulative 1 billion-plus mobile chips just for devices running on Google’s Android software. Moreover, the data center market opportunity is poised to reach more than $15 billion in 2020.
In addition, Qualcomm is also focusing on growth areas like providing automotive infotainment by enhancing product portfolio and increasing channels and customer base, along with connecting billions of devices and systems with applications ranging from sensors and mobile devices to home appliances and cars, in the so-called Internet of Things.
Meanwhile, Qualcomm is currently in troubled waters in China and is gradually working its way out through the challenges faced in the market therein. The company is competing with mobile device makers in China, who refuse to pay expected royalties. Furthermore, a probe related to Qualcomm’s monopolistic practices has also been initiated by the Chinese regulatory authority, National Development and Reform Commission (NDRC).
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