Qualcomm Inc.’s share price down, to set foot at the server chips market by offering ARM-based server processors to data centres operators

The largest mobile-phone chips manufacturer, Qualcomm Inc., said it intended to set foot at the lucrative server chips market and enter a fierce competition with Intel Corp. The company is to provide big data centres operators with server processors, which are based on a technology of ARM Holdings Plc that is widely used in mobile devices.

Currently the server chips market is being dominated by Intel, which uses a x86 technology. The implementation of ARM-powered servers has been long-expected, partly because the 64-bit capabilities, that are often required by server software, were not offered by some suppliers.

As reported by the Wall Street Journal, the Chief Executive Officer of the company, Steve Mollenkopf, revealed at a meeting with analysts in New York: “We are engaged with customers. It will take us a while to build this business, but we think it is an interesting opportunity going forward.”

Qualcomms Chief Executive Officer did not reveal when the sale of server chips is due to start. No details about prices or other issues were disclosed.

The companys strategy to expand its reach into server chips comes at a time when it has just revealed five-year projection, which was more conservative than initially expected. Despite that demand for smartphones in China has been constantly increasing, the opportunities for Qualcomm have been affected by a year-old investigation of the antitrust authorities there.

Qualcomm projected its revenue will increase within the range of 8% to 10% annually over the next five years. It also forecast its earnings per share will increase faster than its revenues.

In addition, Qualcomm said it is making progress in negotiations with a Chinese company in order to put an end to an investigation that is negatively affecting the collection of licensing revenue.

Qualcomm Inc. was down 2.14% to close at $70.47 per share yesterday, marking a one-year decrease of 1.91%. The company is valued at $119.72 billion. According to CNN Money, the 31 analysts offering 12-month price forecasts for Qualcomm Inc. have a median target of $82.00, with a high estimate of $100.00 and a low estimate of $50.00. The median estimate represents a +16.36% increase from the last price of $70.47.