Qualcomm Reportedly Plans Return to Server Market With New Chip

Qualcomm is considering a return to the server market with a new chip in a bid to decrease its reliance on smartphones, Bloomberg News reported on Thursday, citing people familiar with its plan. Shares of Qualcomm rose nearly 3 percent in afternoon trading. The chipmaker is seeking customers for a product stemming from its purchase of Nuvia, the report said, adding that Amazon.com's cloud division, Amazon Web Services (AWS), has agreed to take a look at Qualcomm's offerings.

Last year, the chipmaker acquired Nuvia, a chip startup founded by Apple veterans, with plans to put the firm's technology into its smartphone, laptop and automotive processors.

Amazon confirmed that it has agreed to take a look at the offering, while Qualcomm said it does not comment on rumours and directed Reuters to its press release when it closed the Nuvia deal in March last year.

San Diego-based Qualcomm in July forecast fourth-quarter revenue below Wall Street targets, bracing for a difficult economy and a slowdown in smartphone demand that could hurt its mainstay handset chip business.

"We expect the elevated uncertainty in the global economy and the impact of COVID measures in China will cause customers to act with caution in managing their purchases in the second half," said Chief Financial Officer Akash Palkhiwala, at the time of the earnings.

The Ukraine crisis and China lockdowns have also worsened supply-chain snags and hurt demand, forcing many phone makers to cut orders for chips.

The company now expects smartphone sales to fall 5 percent this year, compared with its prior outlook for flat growth. IDC had projected a 3.5 percent drop in smartphone shipments.

More than half of Qualcomm's total sales comes from the handset segment, which makes modem chips for Apple iPhones and chips that power some models of Samsung's Galaxy S series.

Company executives reiterated that Qualcomm's focus on supplying chips to premium phones and its push to diversify into other sectors such as automotive would cushion the hit from cooling smartphone demand.

© Thomson Reuters 2022