Intel, ARM, Qualcomm To Battle In China For Server Chip Dominance

Updated on

Intel and ARM have long been in a war to capture a large share of the data center business, and now China is their new battleground, says a report from VentureBeat. Qualcomm – Intel’s arch rival — recently announced a $280 million joint venture with a Chinese province to co-design ARM-based server chips.

Intel betting big on China

On Thursday, Intel made an announcement regarding a new joint venture with Tsinghua University and Montage Technology Global Holdings for chip designing. The chip maker will invest $100 million into the venture. The university will develop a programmable chip that could be reconfigured for performing several tasks. Intel said the university will take care of specific local requirements and any concerns the Chinese government has with the technology because it relates to things like encryption, tracking, censorship and the Great Firewall.

In 2014, the chip maker also pledged to invest $1.5 billion to take a 20% stake in a holding company owned by Tsinghua Unigroup, which the university owns. In October, Intel revealed plans of investing up to $5.5 billion in a chip factory for the purpose of manufacturing new kinds of memory chips.

Qualcomm has similar plans

Recently, Qualcomm informed investors of its plans to enter into a joint venture with the province of Guizhou for manufacturing chips based on ARM’s architecture. Intel holds a dominant position in the PC and server chip markets because of its x86 chip architecture, earning revenue of $16 billion a quarter from server chips.

ARM aims to use its low-power advantage to wedge its way into power-efficient servers. There are several licensees which wish to design such chips, and Qualcomm is one. The chip maker will get help from local players to compete against Intel in China. On the other hand, the Chinese government imposed a fine of $975 million on Qualcomm for anti-competitive behavior.

“This announcement answers a lot of questions on how Intel will compete for China’s data center market in an environment where Chinese companies want more control and a government who wants more of a say around security,” Patrick Moorhead of Moor Insights & Strategy, said.

The growing rivalry comes amid efforts from the Chinese government to encourage local chip making. Such efforts from China will help it keep its systems safe from vulnerabilities to foreign-made semiconductors because they stand the risk of being targeted by spies.

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!