Google May Ditch Intel Corporation For Qualcomm’s Server Chips

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Intel may be in deep trouble as Google, which is one of its biggest customers, plans to endorse Qualcomm’s chips in the near future, claims Bloomberg. This means that the business between Google and Intel may end soon.

A big loss for Intel

Around 99% of the server market is powered by Intel chips, but it is expected that at the investor event next week, Google will announce plans to switch to Qualcomm’s chips–provided that the company proves its chips work, says Bloomberg. Citing IDC data, Bloomberg said Google purchases 300,000 Intel’s computer chips each quarter, making it one of its biggest customers.

Intel’s core business is on the decline, and losing Google to Qualcomm will be a big blow to the chip giant, but it won’t topple it. Gartner says that the PC market is on the decline, and since Intel powers all of it, this is bad news for the chip maker. Intel’s server business contributes 50% of its operating income, according to Bloomberg.

Since Google makes the software for its servers, it will be relatively easy for it to replace Intel with Qualcomm, Bloomberg says. This is a potential development that Intel should not take lightly as Qualcomm is the biggest mobile chip maker, and it could deploy the same strategy here as well.

Positive development for Qualcomm

Google’s friendship would be a big win for Qualcomm’s server campaign. Last month, Qualcomm announced a $280 million joint venture in China to develop server chipset technology. In October, the San Diego, Calif.-based chip making company announced plans to start shipping evaluation systems with pre-production server SoCs to tier-one data centers.

Most non-Apple smartphones make use of Qualcomm chips, and this gives it an edge over Intel in an environment in which smartphone sales are on the rise but PC sales are declining. It is expected that by 2018, the smartphone market will reach 1.8 billion unit sales.

On Thursday, Intel shares closed up 1.47% at $29.77. Year to date, the stock is down by almost 14%, while in the last year, it is down by almost 10%. Qualcomm shares closed up by over 2% yesterday.

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