Stefan Mileschin

Qualcomm has no plans to abandon its efforts to create processors for data centres, despite rumours that it is giving up on the idea.

In May, Bloomberg reported that Qualcomm was exploring whether to sell or shut down the server chip unit.

However, Qualcomm President Cristiano Amon said that while the chipmaker is making staff reductions in the unit but intends to keep it running with a narrower focus on large internet companies in the United States and China.

“We are not looking at strategic options. We are not selling. We are still focused on it,” Amon told Reuters.

He pointed to an April earnings call in which Chief Executive Officer Steve Mollenkopf said Qualcomm was considering cost-cutting options in areas that are not central to Qualcomm’s business, which overwhelmingly comes from selling chips and licensing technology for mobile phones.

What will happen instead is that the server chip business will be rolled into Qualcomm's Qualcomm CDMA Technologies unit, which designs and sells mobile phone chips, to gain cost efficiencies.

Amon said the restructured server chip unit will focus on large cloud computing players including the Chinese internet giants such as Alibaba, Tencent, and Baidu through a joint venture in China.

Large internet companies tend to write much of their own internal software and can customise it for Qualcomm’s chips. That means they will not struggle like smaller players to adapt off-the-shelf data center software that is overwhelmingly written to run on Intel’s so-called x86 chips.

“It’s very clear to us that the ARM opportunity is focused on a few players where you don’t have the software x86 barrier to entry,” Amon said.

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