IT giant leaves chip market for data centers - tell you what it means for the industry
The latest Qualcomm ARM chip for data centers - Centriq, came out a little over a year ago and gathered a lot of positive feedback at the start. But in mid-December, the IT giant announced that it was closing the line that deals with the production of processors for the data center.
We describe the reasons for such a decision and how it will affect the industry as a whole.
/ photo by Marco Brandstetter PD
Qualcomm released the Centriq ARM processor in November 2017. The chip had great potential in the data center market: it was several times cheaper than Intel's flagship models, had similar performance and lower power consumption.
These advantages then came to taste cloud providers, and Microsoft introduced support for Centriq chips in Windows Server. The company also planned to install Qualcomm processors in its own data centers. At the same time, Alibaba and HPE expressed interest in the device, and they announced a possible collaboration with Qualcomm.
Despite the advantages over competitors and the interest of large market players, the processor never took off. In December, Qualcomm announced that significantly reduces the amount of investment in the development of chips for the data center and reduces almost three hundred employees.
One of the reasons why Qualcomm turns off work on its chip is the high popularity of x86 processors. The transition to the ARM-architecture will require the processing of software code for applications that run on data center servers.
Not all companies are willing to take that risk. For this reason, Qualcomm could not find enough clients for the device. The lack of orders is evidenced by the fact that the IT giant has never mentioned Centriq in its financial reports.
The second reason is relatedwith the struggle of Qualcomm for their own independence. At the end of 2017 and the beginning of 2018, Broadcom Singapore tried to absorb the company several times. The deal did not take place because of the ban of the US government, but investors still Qualcomm worried about the future of the organization and questioned its viability.
Shareholders demanded that management cut billions in costs. Therefore, Qualcomm decided to allocate less money for "non-core" areas, among which were chips for the data center.
Representatives of the company itself say that in the future, Qualcomm will focus on devices for 5G networks and peripheral computing. In this case, the company is not going to completely abandon the chips for data centers. Centriq technology will be developed in China under the brand Thang Long in collaboration with Baidu, Alibaba and Tencent.
It is not yet known how the Qualcomm decision will affect its Western customers. The device was tested by several large IT companies, including LinkedIn, Uber, Cloudflare and Red Hat, but it is unclear which of these organizations have already implemented Centriq in their data centers. A new supplier of processors may have to look for at least two companies: the Hatch Entertainment gaming cloud platform andprovider of SDN solutions for the Solarflare data center.
At the same time, it is surprising that Microsoft has benefited from Qualcomm’s withdrawal from the server processor market. The company hired most of the employees who lost their jobs due to the closure of the Centriq project. Among them are the heads of units. At Microsoft, former Qualcomm engineers will work on quantum computers, which is likely to help the IT giant get ahead in this market.
According to experts, processors from other manufacturers, in particular Cavium, can become a replacement for Centriq. She released her ARM chip Thunder X2 in 2018, and the device is already in demand in supercomputers. Qualcomm’s reluctance to develop Centriq could be an opportunity for Thunder X2 to become more popular in other areas.
In the fall of 2018, a startup Ampere introduced its first product - an ARM processor for hyper-scalable data centers. Huawei is also counting on this architecture: the company has developed a 7-nm processor that will be used to build cloud systems.
/ Photo Rawpixel Ltd CC BY
Keep up with ARM manufacturers and developers of other architectures. For example, AMD introduced7-nm processor Epyc Rome, which will be the first of all devices of the company to use Zen 2. It will help to increase processor performance by 25% with the same power consumption as the chips of the previous generation.
IBM developed the 7nm processor with Samsung. The device will be used in the IBM Z cloud service, as well as in LinuxOne servers. According to IBM, the new processor is designed to work with machine learning technologies and will be released in 2020.
Cloud computing is one of the main drivers for the development of the processor market. And ARM-chips (even with the departure of Qualcomm) have every chance to capture a significant market share. Recently , a new rebranding was conducted for architecture - the new technology was named Neoverse.
Its task is to integrate data centers and peripherals into the ecosystem, many of which are based on ARM chips. It is believed that thanks to this, in the coming years, ARM will be able to press its competitors.
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We describe the reasons for such a decision and how it will affect the industry as a whole.
/ photo by Marco Brandstetter PD
End of the path for Centriq
Qualcomm released the Centriq ARM processor in November 2017. The chip had great potential in the data center market: it was several times cheaper than Intel's flagship models, had similar performance and lower power consumption.
These advantages then came to taste cloud providers, and Microsoft introduced support for Centriq chips in Windows Server. The company also planned to install Qualcomm processors in its own data centers. At the same time, Alibaba and HPE expressed interest in the device, and they announced a possible collaboration with Qualcomm.
Despite the advantages over competitors and the interest of large market players, the processor never took off. In December, Qualcomm announced that significantly reduces the amount of investment in the development of chips for the data center and reduces almost three hundred employees.
Reasons for failure
One of the reasons why Qualcomm turns off work on its chip is the high popularity of x86 processors. The transition to the ARM-architecture will require the processing of software code for applications that run on data center servers.
Not all companies are willing to take that risk. For this reason, Qualcomm could not find enough clients for the device. The lack of orders is evidenced by the fact that the IT giant has never mentioned Centriq in its financial reports.
The second reason is relatedwith the struggle of Qualcomm for their own independence. At the end of 2017 and the beginning of 2018, Broadcom Singapore tried to absorb the company several times. The deal did not take place because of the ban of the US government, but investors still Qualcomm worried about the future of the organization and questioned its viability.
Shareholders demanded that management cut billions in costs. Therefore, Qualcomm decided to allocate less money for "non-core" areas, among which were chips for the data center.
Market outlook
Representatives of the company itself say that in the future, Qualcomm will focus on devices for 5G networks and peripheral computing. In this case, the company is not going to completely abandon the chips for data centers. Centriq technology will be developed in China under the brand Thang Long in collaboration with Baidu, Alibaba and Tencent.
It is not yet known how the Qualcomm decision will affect its Western customers. The device was tested by several large IT companies, including LinkedIn, Uber, Cloudflare and Red Hat, but it is unclear which of these organizations have already implemented Centriq in their data centers. A new supplier of processors may have to look for at least two companies: the Hatch Entertainment gaming cloud platform andprovider of SDN solutions for the Solarflare data center.
At the same time, it is surprising that Microsoft has benefited from Qualcomm’s withdrawal from the server processor market. The company hired most of the employees who lost their jobs due to the closure of the Centriq project. Among them are the heads of units. At Microsoft, former Qualcomm engineers will work on quantum computers, which is likely to help the IT giant get ahead in this market.
How are other market players doing?
According to experts, processors from other manufacturers, in particular Cavium, can become a replacement for Centriq. She released her ARM chip Thunder X2 in 2018, and the device is already in demand in supercomputers. Qualcomm’s reluctance to develop Centriq could be an opportunity for Thunder X2 to become more popular in other areas.
In the fall of 2018, a startup Ampere introduced its first product - an ARM processor for hyper-scalable data centers. Huawei is also counting on this architecture: the company has developed a 7-nm processor that will be used to build cloud systems.
/ Photo Rawpixel Ltd CC BY
Keep up with ARM manufacturers and developers of other architectures. For example, AMD introduced7-nm processor Epyc Rome, which will be the first of all devices of the company to use Zen 2. It will help to increase processor performance by 25% with the same power consumption as the chips of the previous generation.
IBM developed the 7nm processor with Samsung. The device will be used in the IBM Z cloud service, as well as in LinuxOne servers. According to IBM, the new processor is designed to work with machine learning technologies and will be released in 2020.
Cloud computing is one of the main drivers for the development of the processor market. And ARM-chips (even with the departure of Qualcomm) have every chance to capture a significant market share. Recently , a new rebranding was conducted for architecture - the new technology was named Neoverse.
Its task is to integrate data centers and peripherals into the ecosystem, many of which are based on ARM chips. It is believed that thanks to this, in the coming years, ARM will be able to press its competitors.
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