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 The Sunnyvale, California, company disappointed Wall Street on
Tuesday with first fiscal quarter revenue and second-quarter revenue
outlook that missed expectations due to a declining legacy business,
sending its shares 4 percent lower after hours.
But Applied Micro Circuits also announced it is shipping its new
X-Gene "microserver" chips, made with intellectual property licensed
from ARM Holdings, whose low-power technology is widely used in
smartphones.
In the quarter that ended in June, Applied Micro Circuits recognized
its first revenue from the chips - about a $1 million - and the
company said it expects "meaningful" revenue from the chips in the
quarters ending in December and March as shipments build.
"There is backlog today on the books for X-Gene, both in the
September quarter and December quarter, as well as the March
quarter," Chief Executive Officer Paramesh Gopi told analysts on a
conference call.
While microservers have yet to be meaningfully adopted, proponents
say data centers can be made more cost effective and energy
efficient by using them instead of Intel's brawny server chips.
Intel dominates the server market and it stands to lose if server
chips based on a rival architecture catch on, even if only a few
percentage points of market share.
"While we don't take any competition lightly, the much-hyped threat
of ARM servers getting any significant market segment share any time
soon has been vastly overplayed," said Intel spokesman Bill Calder.
In January, Facebook Inc hardware guru Frank Frankovsky lauded
low-power server technology and said he looked forward to greater
choice of processors.
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Microservers at first will be most suited to data centers run by
major Internet companies and for use in high-performance computing,
proponents say.
Intel executives in the past have said microserver chips being
developed by Applied Micro Circuits, Advanced Micro Devices and
other small rivals were unproven and not a serious threat to its
server chip business.
In the past couple of years, Intel has launched its own low-power
chips, designed with its own architecture, in anticipation of a
potential move toward microservers by major Internet players like
Facebook and Google Inc.
(Reporting by Noel Randewich; Editing by Cynthia Osterman)
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