AppliedMicro sees future in low-power server chips

Thu Feb 7, 2013 4:31pm EST
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By Noel Randewich

SUNNYVALE, California (Reuters) - Chipmaker Applied Micro Circuits Corp believes selling low-power processors for cloud data centers run by the likes of Facebook, Google and Inc could account for half of its business within three years.

AppliedMicro is one of a handful of chipmakers betting that energy-efficient microservers will become widely used in data centers and it appears to have an early advantage among rivals keen to challenge Intel.

Chief Financial Officer Robert Gargus told Reuters in an interview on Thursday he has been increasingly impressed this month with performance test results on new chips that include 64-bit features widely used in servers, a first among its competitors relying on technology licensed from Britain's ARM Holdings.

ARM chips lack horsepower but data centers that combine many of them instead of just a few heavy-duty Intel processors may provide more computing power using less electricity.

Gargus said AppliedMicro, whose stock has surged almost 80 percent since September, is on track to see revenue from microserver chips next year.

Those chips could account for as much as half the company's business within three years as leading-edge Internet companies like Facebook seek ways to reduce energy bills, followed by more traditional companies like big banks, Gargus said.

"The question isn't if but when. It comes down to, what's the adoption curve?" he said. "We're hoping that the (total cost of ownership) equation for this is compelling enough that people move fairly rapidly, but it's hard to predict."

AppliedMicro already sells chips for wifi routers, cellphone base stations and other networking and storage devices. Analysts on average expect it to have $195 million revenue for the fiscal year ending in March, according to Thomson Reuters I/B/E/S.   Continued...