Qualcomm Inc, trying to break Intel Corp’s dominance of chip sales for server computers, is forming a joint venture in China, the fastest growing consumer of data center hardware.
The San Diego-based chipmaker is poised to take a 45 percent stake in a new company being formed with the government of Guizhou Province. The venture plans to develop server chips for the Chinese market using Qualcomm designs and technology.
“We felt the fastest way to participate in China was through a joint venture,” said Anand Chandrasekher, who heads Qualcomm’s fledgling server unit. “We view the China market as the second-largest server market in the world by 2020 and it is the fastest growing market already.”
Qualcomm has a long way to go. The world’s biggest mobile phone chipmaker is one of many challengers seeking to dislodge Intel in the lucrative market for powerful processors that run data center machines.
Intel, the biggest overall semiconductor maker, has squashed all opposition and enjoys more than a 99 percent market share. It is able to charge more than US$7,000 for some models, more than seven times the price of even its most expensive desktop offering.
While the Qualcomm-Guizhou joint venture’s initial products will essentially be the same as the US chipmaker’s forthcoming offerings, over time it will seek to customize chips for local customer needs, Chandrasekher said.
Qualcomm is seeking to expand outside of its core smartphone chip market, where it is facing increasing competition and declining sales. In October last year, the chipmaker started sending out samples of a server chip to prospective customers.
Chandrasekher said that market will be a US$15 billion opportunity for the company by 2020.
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