Members of Qualcomm's top management are still divided over whether the company should stay in or withdraw from the server market, despite reportedly having sharply reduced R&D resources for the segment, industry sources have said in response to speculation that the vendor is mulling terminating its server chip business.
Qualcomm has reportedly slashed as high as 30% of its engineering manpower for joint development of server chips with its OEM partners, and is also reportedly seeking potential buyers of its server chip unit, triggering speculations that the chipmaker may gradually quit the server processor market now almost monopolized by Intel.
Qualcomm has not confirmed any report or speculation concerning its server chip business.
Even if Qualcomm decides to stay in the server market, it will still likely reduce its resources for the segment, the sources from the server industry commented.
Intel's dominance in the server chip market has worried cloud server users including Amazon, Google and Microsoft about high risks associated with the single supply source and about the lack of bargaining chips for pricing, prompting Qualcomm to jump into the server processor market.
Qualcomm first launched 24-core ARM-based server SoC in 2015, but failed to get positive market response. In November 2017, Qualcomm staged a comeback by releasing its new Amberwing Centriq 2400 ARM server processor, which has riveted significant market attention for carrying lower unit cost and comparable performance against Intel's Xeon server chipsets.
But the top management of Qualcomm promised to shareholders in January 2018 that the company would cut the annual expenses by US$1 billion to boost profitability, in an effort to dampen a hostile takeover proposal by Broadcom launched in early November 2017. Qualcomm's CEO Steve Mollenkopf also said in April 2018 that the company would cut expenses on non-core business sectors.
Divided views
Some Qualcomm management members have reportedly expressed support for the company to withdraw from the server chip market, citing the failure to score any significant return from its substantial investment in the server chip development. It remains to be seen whether Microsoft and other major clients would adopt Qualcomm's server chipsets although they have claimed to support the firm, and therefore it had better stop injecting more resources into the segment, they reasoned further.
But some others have reportedly insisted that Qualcomm should have a presence in the server chip market, so as to secure a new revenue growth driver as the smartphone sector is slowing down.
Qualcomm has assured its OEM partners that it will not change technical support to them, but technical manpower rendered for some OEM cooperation projects have reportedly been reduced by up to 30%, according to the sources.
Servers have a longer lifecycle of 3-5 years than PC or smartphones, the sources said. Qualcomm could still manage to capture orders from leading datacenter operators with its latest server processor released in late 2017. |