Google's reported chip plans could hurt Intel

Another potential cloud has appeared on the horizon for Intel and its server-chip business.

Bloomberg has reported that Google is considering making its own server chips, using a design from British firm ARM Holdings.

Intel, which gets most of its revenue from chips for personal computers, is hoping to hang on to its next major source of money – server chips. But as we’ve reported, a variety of chip companies are developing server chips based on ARM’s design — with Applied Micro Circuits of Sunnyvale considered by some analysts to have the best shot initially at snatching a share of that business away from Intel.

In response to Bloomberg’s story, analysts with Raymond James & Associates and FBR Capital Markets on Friday said they considered it unlikely that Google would want to make its own chips, since that would take at least three years.

Instead, they said the news suggests an ARM chipmaker — especially Applied Micro Circuits — might be in line to pick up Google’s server chip business, which could be a nice chunk of change. FBR’s experts estimated that Google spends $250 million a year on Intel’s Xeon server chips.

None of this is good news for Intel. However, the FBR analysts said ARM-based chips will probably capture only 10 percent of the server-chip market by 2018.

Photo by Paul Sakuma, AP


Steve Johnson Steve Johnson (298 Posts)

Steve Johnson covers the microchip industry, cyber security and the big-technology sector that includes Hewlett-Packard, Oracle and Cisco Systems.