About 10 years ago, Advanced Micro Devices (AMD) tried something daring. It decided to build a server chip for the first time and tackle Intel (INTC) head on in the data center market. The product AMD came up with, called Opteron, turned out to be a massive success. AMD began selling tons of high-profit server chips and used its good fortune to apply more pressure than ever on longtime foe Intel in the PC chip business as well.
Opteron worked because it was bold and different. AMD had stuffed the chip full of new technology, such as the ability to tap into vast pools of memory and to shuttle data around a server at very high speeds, and it took Intel years to match the features. Eventually, though, Intel did mimic AMD, and AMD stumbled—per usual—with manufacturing new versions of Opteron. And, well, the glory days were over.
Until now … maybe.
AMD has once again summoned the courage to try something daring. It plans to deliver a new server chip in 2014 that’s based on an ARM design instead of the x86 designs that it and Intel have favored for many years. This basically means AMD will be taking the type of chip found in smartphones and tablets and beefing it up to handle data center software.
This idea isn’t even all that mad. ARM chips run slower than x86 chips—true—but they also consume less power. So if you’re, say, Facebook (FB), and you just want to display a basic Web page, an ARM chip has enough horsepower to handle the work and will burn through fewer watts while doing it. For companies such as Facebook, Google (GOOG), and Amazon.com (AMZN), with tens of thousands of servers in their data centers, those watts add up over time, meaning that ARM-based servers could save them a lot of money.
The major problem with ARM chips is that they lack a lot of the features data center folks tend to like. They’re not able to tap into as much memory as x86 chips, and they don’t have some of the error-correcting tools found on more expensive chips. AMD’s big push here is to fix those flaws and pop out a server-friendly ARM chip in a couple of years.
AMD didn’t come up with this idea out of thin air. A startup called Calxeda has spent years working on building a server chip based on the ARM design. Some of the big server makers have these types of systems in their labs, and I’ve also heard some very large Web companies have been experimenting with ARM-based servers. Intel has a response to all of this as well: its Atom chip, which is low-power enough to go into smartphones and based on the familiar x86 designs.
Can AMD have another Opteron moment? Well, it better hope so. The company has spent much of the past few years bumbling around, looking for a spark. Its server chip business has just about disappeared, and AMD failed to produce any chips capable of participating in the mobile device revolution. AMD just announced yet another round of layoffs, saying it will cut 15 percent of the company’s staff as it tries to cope with falling sales.
The good news for AMD is that it’s bringing true server expertise to the ARM realm. It’s done this type of thing before, and done it well—for a spell. Earlier this year, AMD also acquired a startup called SeaMicro that had developed a unique, low-power server design. Its hardware will be fused with the new chip in a bid to give AMD a cloud-computing dynamo.