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

Author: Anusuya Lahiri | August 19, 2022 09:23am

  • Qualcomm Inc (NASDAQ: 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 (NASDAQ: 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 (NASDAQ: 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 (NASDAQ: GOOG) (NASDAQ: GOOGL) Google, and Microsoft Corp (NASDAQ: 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 (OTC: SFTBY) Arm Ltd to Intel Corp's (NASDAQ: 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 (NASDAQ: AMD), and Nvidia Corp (NASDAQ: 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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