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.
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.
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 personal computers. A deal between ARM and Google could dent
Intel's dominance in the server market as Google is one of the biggest
buyers of server chips.
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.
RM 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 Galaxy devices. ARM, which receives royalty on the sale
of every chip that uses its technology, declined to comment on the
"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.
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 to Reuters. Some analysts said fears
that Intel could lose a chunk of its market share were overblown.