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 A deal would speed up ARM's push into the server market, where it
has been a late entrant.
ARM's chief executive, Simon Segars, said in March after taking the
helm that he saw big opportunities in servers, an area where the
company was just getting started.
ARM licenses its designs to chipmakers such as Qualcomm and Texas
Instruments, whose chips are used in Apple Inc's iPhone and Samsung
Electronic Co's Galaxy devices.
ARM, which receives royalty on the sale of every chip that uses its
technology, declined to comment on the report.
Jefferies analyst Lee Simpson said he expected companies such as
Amazon and Facebook, which maintain large server farms, to adopt
ARM's designs over the next couple of years.
ARM's strength in designing low-power processors has enabled it to
dominate the mobile devices sector, while Intel Corp is by far the
leader in chips used in servers and personal computers.
A deal between ARM and Google could dent Intel's dominance in the
server market as Google is one of the biggest buyers of server
chips.
"Since ARM chips for servers are cheaper, consume less power and
require lower cooling compared with Intel chips, they would be very
attractive for Google," Charles Stanley analyst Tom Gidley-Kitchin
told Reuters.
Intel's shares fell as much as 1.5 percent in early trading on
Friday on the Nasdaq.
GOOGLE'S SAVINGS
Gidley-Kitchin also said Google could be using the deal to pressure
Intel to reduce prices of its low-power chips.
For Google, a deal could result in massive savings and help it
manage its servers better.
[to top of second column] |
 Google, which contributes about 5 percent to Intel's sales, could
better manage the interactions between hardware and software if it
used its own designs, Bloomberg said, citing a source with direct
knowledge of the matter. (http://link.reuters.com/gaq45v)
"We are actively engaged in designing the world's best
infrastructure. This includes both hardware design (at all levels)
and software design," Google said in an emailed comment to Reuters.
Some analysts said fears that Intel could lose a chunk of its market
share were overblown.
"We believe that ARM based server products will predominantly cater
to hyperscale workloads and capture just 10 percent of overall
server units by 2018," FBR Capital Markets analyst Christopher
Rolland said in a note.
ARM's shares closed up 3 percent at 1003 pence on on Friday the
London Stock Exchange. The company's U.S.-listed shares were up 3.4
percent at $49.27 by midday on the Nasdaq.
(Additional reporting by Chandni
Doulatramani in Bangalore; editing by Saumyadeb Chakrabarty)
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