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



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  • Jean ferrerion

    This is a planned rumor to affect stock price, pure and simple.

    And anybody who truly understands chips does not buy it one bit.
    It makes no sense at all for Google to go in that direction.

    • Google can save Billions of dollars on hardware and power consumed (cooling costs being the largest cost of servers) to host the worlds largest cloud services by using ARM in most of the future Servers that Google is going to deploy.

      • dan

        Blumturd is about to report that Intel is buying google

        • dan

          and Apple is buying Intel

          • dan

            And the gov’t is closing down apple for hiding all of it’s money outside of the US

          • dan

            these have all been per an unnamed source inside of president Obastard’s underwear

      • dan

        They don’t even spend billions buying chips from intel what a dufus

        • Google is probably 15-20% of Intel profits, this is a giant blow to Intel because server chips is perhaps upwards 40% of Intel profits today. Google does spend Billions of dollars per year cooling their x86 powered server parks, using ARM is not only way cheaper per core, it allows for way way better optimized server hardware, which means 10x better performance at 10x lower power consumption, ARM servers instead of x86 Intel servers is the only possible future for Google and for the web.

          • dan

            That’s why ARM is used in so many servers you must believe everything you read on the internet do you know how many ARM servers Amazon, Google and Apple are USING less then 1% and there is a reason for that… So keep believing all the FUD you are reading,,,,, They are just releasing this crap to drive down the cost of the Chips that they buy. Also using misinformation to drive stock prices down so they can invest cheaper,,,,

          • Ever major cloud provider is doing large ARM Server test deployments at the moment and all want to deploy full server parks on ARM as soon as the ARM chips are ready. The FUD is spread by people like you who want people to believe that only Intel x86 exists on the market and that cheaper/better alternatives are impossible. You are the FUD, I am the common sense.

          • dan

            Your information is wrong I know for a fact that Amazon is not doing any testing. And by the way the latest micro server chips from Intel don’t require any cooling fans so there goes ARM so called advantage also they have lower power consumption which means lower operating temp and cost..

          • You obviously have no idea what you are talking about. Amazon is a $175 Billion cloud company, of course they have invested in thousands of ARM servers for testing already, they would be completely stupid and moronic not to spend such money on very important R&D that influences the core of their business. Intel’s x86 is completely dead simply because the business model sucks and has no future. ARM is going to dominate in new servers starting in 2014 or 2015 simply because the ARM business model allows for a variety of system providers, dozen chip makers all innovating and implementing new solutions, way way way more and better R&D is only possible with ARM and not with x86. It’s not only about the power consumption being much better on ARM than on x86, it’s about the thousand different ways Google, Amazon, Facebook and others can customize their cloud apps to insanely optimized server hardware implementations, something you can NEVER do using Intel stuff, never.

          • dan

            You are on crack and need to put the pipe down and go back to rehab

          • dan

            Avoton beats the ARM architecture on power efficiency.

          • Austin Stretcho

            “Ever major cloud provider is doing large ARM Server test deployments at the moment and all want to deploy full server parks on ARM as soon as the ARM chips are ready.”

            The first part of your statement should be true because it would crazy for companies to not prototype these machines. They can use their findings as leverage for better pricing. All companies do it.

            The last part of your statement is simply opinion and you have no information to say what is fact.

            “You are the FUD, I am the common sense.”
            Most would disagree with both parts.

          • Austin Stretcho

            If you had bothered to read the original story, you would know that Google is thought to be responsible for 4.3% of Intel revenues. 4.3% of $53b is $2.28B of revenue. At 60% margins, Google should be responsible for $1.37b

            “way way better optimized server hardware, which means 10x better performance at 10x lower power consumption,”
            Hmmm. 10x??? Please show your calculations so we can figure out where your error is. You might even learn something in the process to clean up some of the other fallacies that you operate under.

          • If you had bothered to learn anything about the worldld, you would know that profits aren’t revenuerevenue. That GoogleGoogle probably makes up 15-20 percent offof Intel overall profits, what Google decides to do, influences 50% more. Server eprofit is by far the largest margin for Intel’sIntel’s business, Google is by far Intel’s largest server customer.

  • dan

    Another lie to manipulate stock prices. Bloomberg is about as reliable as Obama. IF YOU LIKE YOUR INSURANCE YOU CAN KEEP IT…. There unnamed source was Joe Biden

    • The only lie is that x86 Intel is not dying.

  • Austin Stretcho

    Bloomberg publishes a rumor based on an anonymous “person with knowledge of the matter”. They use a Google job posting for an ASIC designer with network experience to confirm that their theory is valid.
    The Bloomberg editor made a mistake by allowing this to be published and republished on Bloomberg. This trash was then picked up and repeated by every cable channel and blogger. Each time it is copied, the rumor grows and gains additional factual status.
    Check out the Job Description and it is PCI, IO and networking ASIC designer. No ARM. No CPU. Nothing to confirm the leap in logic.
    A journalist should add value to a story, not subtract.

    • Ex-Intel CEO is still on Google’s Board of Directors, which is the main reason why Google doesn’t want to piss Intel off too much just yet. It’s already proven that ARM Powered Chromebooks, Android are the only successful products and that all Intel Powered attemps at Google all have failed. The same is for the future og Google servers, ARM is the only viable solution, x86 is dead.

      • Austin Stretcho

        Your reply does not even deal with my posting. I simply said that any article published by a “Bloomberg” quality organization based on an anonymous source (whose motives cannot be assessed) and one job opening that does not even deal with the topic is just bad journalism. Any organization that becomes a mindless repeater of that story is “below bad journalism”.
        BUT …. your comments …. ugh ….
        “Ex-Intel CEO is still on Google’s Board of Directors, which is the main reason why Google doesn’t want to piss Intel off too much just yet.”

        Paul Otellini, as a member of the Google BOD, will do what is right for Google shareholders. He was trusted to do so as Intel CEO and still is, or he would be replaced.

        “The same is for the future og Google servers, ARM is the only viable solution, x86 is dead.”

        This statement about “servers” is just silly, but is OK if you want to believe it.

        • Sooresh

          stop looking for so much relevance. your logic is irritating. you are wrong.

  • drensber

    I have no doubt that Google is dabbling in processor design, since they have tons of cash and GOOG shareholders don’t really question anything that they do with it. Going from “dabbling” to “replacing all of the CPUs in their servers” would not be a simple or quick path though… even for a company like Google with 75% of the world’s brain power.

    It seems to have barely affected the INTC stock price today, so I guess people aren’t really believing whatever the dirt balls at Bloomberg are trying to sell them.

    • Bloomberg says Intel stock is down 3.1%.

      • dan

        Blmberg said your an Idiot I guess they are right

      • drensber

        They did manage to drive the price down during after hours on Thursday evening, but it closed down $.18 and hovered around that point nearly all day Friday. Maybe you’d want to double check my math, but I think that .18/24 is a lot less than 3%.

  • Google may have been working on designing their own ARM processors for years already. Nobody is forced to announce when they start making designs in house.

  • fran farrell

    Optimizing chips for Google’s system will help both ARM and Intel. Google already has simulated alternative computer-on-a-chip designs for its massive server-farm complex. Over the next three years massive numbers of GPUs will combine with massive amounts of fast cache on computer chips that do mostly vector processing. Maybe one CPU per 16 Graphics Processing Units.

    We already know that Google will: 1) encrypt everything 2) video stream after best compression that halves the transmission bandwidth to the user (at Google’s processing cost) 3) offload as much AI as possible from the puny devices that users carry. Voice Recognition and Conversational Search as well as gesture recognition, mouth, eye, ears and multi-spectral facial characteristics will give highly reliable ‘read my lips’ interpretation to whatever the user desires from his puny device.

    Google will not explicitly reveal its three year plan but companies that work with Google will learn enough to build better chip foundries on which Google designs can be realized. There will be no losers.

  • symbolset

    This isn’t really a threat to Intel. Google-scale companies like Amazon, Yahoo, Facebook have control of their full software stack and can leverage that to get a real business advantage from own-brand chips that optimize for power, efficiency, or some other feature suite.

    But they would never sell them – that would blunt the business advantage. Also, they are unlikely to be able to sell them as PaaS cloud.