By Aashika Jain
Dec 13 British chip designer ARM Holdings Plc's
shares rose as much as 5.7 percent after Bloomberg
reported on Thursday that Google Inc may use ARM's
technology to design its own server processors.
A deal would speed up ARM's push into the server market,
where it has been a late entrant.
ARM's chief executive, Simon Segars, said in March after
taking the helm that he saw big opportunities in servers, an
area where the company was just getting started.
ARM licenses its designs to chipmakers such as Qualcomm
and Texas Instruments, whose chips are used in
Apple Inc's iPhone and Samsung Electronic Co's
ARM, which receives royalty on the sale of every chip that
uses its technology, declined to comment on the report.
Jefferies analyst Lee Simpson said he expected companies
such as Amazon and Facebook, which maintain large server farms,
to adopt ARM's designs over the next couple of years.
ARM's strength in designing low-power processors has enabled
it to dominate the mobile devices sector, while Intel Corp
is by far the leader in chips used in servers and
A deal between ARM and Google could dent Intel's dominance
in the server market as Google is one of the biggest buyers of
"Since ARM chips for servers are cheaper, consume less power
and require lower cooling compared with Intel chips, they would
be very attractive for Google," Charles Stanley analyst Tom
Gidley-Kitchin told Reuters.
Intel's shares fell as much as 1.5 percent in early trading
on Friday on the Nasdaq.
Gidley-Kitchin also said Google could be using the deal to
pressure Intel to reduce prices of its low-power chips.
For Google, a deal could result in massive savings and help
it manage its servers better.
Google, which contributes about 5 percent to Intel's sales,
could better manage the interactions between hardware and
software if it used its own designs, Bloomberg said, citing a
source with direct knowledge of the matter. ()
"We are actively engaged in designing the world's best
infrastructure. This includes both hardware design (at all
levels) and software design," Google said in an emailed comment
Some analysts said fears that Intel could lose a chunk of
its market share were overblown.
"We believe that ARM based server products will
predominantly cater to hyperscale workloads and capture just 10
percent of overall server units by 2018," FBR Capital Markets
analyst Christopher Rolland said in a note.
ARM's shares closed up 3 percent at 1003 pence on on Friday
the London Stock Exchange. The company's U.S.-listed shares were
up 3.4 percent at $49.27 by midday on the Nasdaq.