Advanced Micro Devices, Inc. (AMD) Turns to ARM Holdings plc (ADR) (ARMH) for Support

When it comes to servers, Intel Corporation (NASDAQ:INTC) has all but won this leg of the race. Rival Advanced Micro Devices, Inc. (NYSE:AMD) has fallen well behind, much to their chagrin, and to hear them tell it, the market they serve. Both Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices, Inc. (NYSE:AMD) share the x86 architecture, which serves as the backbone for the majority of PCs and server applications but has yet to make a significant break into the smartphone market. The smartphone chip market is dominated by ARM Holdings plc (ADR) (NASDAQ:ARMH), which as of yet hasn’t made a huge break into the server market.

So what’s Advanced Micro Devices, Inc. (NYSE:AMD)’s next move? Try to capture some of the magic of ARM Holdings plc (ADR) (NASDAQ:ARMH)’s smartphone chips and harness it to take market share in the server market. While there has been interest across the industry, Advanced Micro Devices, Inc. (NYSE:AMD) asserts that their project, code-named “Seattle,” will be the “only 64-bit ARM Holdings plc (ADR) (NASDAQ:ARMH) based server SoC from a proven server processor supplier.” It is worth noting that the company isn’t abandoning their PC roots, also announcing two new x86 designs in their most recent release.

What does this mean for ARM?

In ARM’s case, this ultimately can be nothing but a win. ARM’s unique structure has played an important role in the widespread adoption of its chip designs. The company’s structure differs from the other major chip players in that they create the designs and then receive royalties from the companies that produce and use them. A major company like Advanced Micro Devices, Inc. (NYSE:AMD) adopting their chips falls perfectly inline with their overall strategy.

Is this a win for AMD?

It is hard to say definitively; the first samples of Seattle are expected in the first quarter of 2014. However, the move does have serious potential, though Advanced Micro Devices, Inc. (NYSE:AMD) isn’t the only one to notice. Although AMD bills Seattle as a first, Silicon Valley rival Applied Micro Circuits Corporation (NASDAQ:AMCC) already has its own version of an ARM-based server in sample production as of April this year. The distinction is that AMD recognizes itself as a “proven server processor supplier.”

Applied Micro Circuits Corporation (NASDAQ:AMCC)’s product, dubbed X-Gene, is a part of Hewlett-Packard Company (NYSE:HPQ)’s Project Moonshot. Hewlett-Packard Company (NYSE:HPQ), like AMD and everyone else, is interested in building servers with solid performance and drastically reduced power consumption. Project Moonshot is trying to drastically alter the direction of servers, relying on high-efficiency mobile chips in readily configurable arrays. While the project does make use of ARM Holdings plc (ADR) (NASDAQ:ARMH) chips, it also is designed to work with a wide number of options, allowing greater flexibility for its customers.