Qualcomm may move server chipmaking business to Guizhou

Qualcomm has laid off hundreds of people in its data center based in the US, a move that analysts said showed the company intends to transfer its server chip business to China.

The chipmaker laid off 269 employees in all, including 144 in Raleigh, North Carolina, where its data center business is located, and an additional 125 in San Diego, California, the company’s headquarters, US technology website TechCrunch reported on Saturday.

In April, the company slashed about 1,500 jobs, primarily in California. The staffing in the Research Triangle location, North Carolina has been cut to about 50, the report said.

Qualcomm is very likely to move its server chip business to Huaxintong, the company’s joint venture company with the People’s Government of Guizhou Province in Southwest China, Han Xiaomin, general manager of CCID Consulting’s integrated circuit business, told the Global Times on Sunday.

Huaxintong launched StarDragon 4800, the first generation commercial ARM (Advanced RISC Machines) structure server chip in Beijing on November 27, announcing the first step of mass production, according to chinanews.com.

Taken together, the layoffs in the US and the launch event signal that Qualcomm intends to move its data center chipmaking business to China, Han said.

Xiang Ligang, chief executive of telecom industry news site cctime.com, agreed, adding that China is a vast market for Qualcomm. “Its major clients include Xiaomi, Lenovo, Vivo, Oppo and ZTE,” Xiang said. “These companies’ major data centers are located in China, so Qualcomm enjoys better opportunities here.”

Qualcomm’s data center business has been struggling to compete with that of Intel. But the company has denied that it is abandoning the category altogether, TechCrunch said.

For companies trying to develop server chips in different technology routes with Intel, it’s hard to compete with Intel without the support of end manufacturers.

“Qualcomm’s server business could gain advantages in China with better government support. China’s domestic semiconductor companies such as Loongson, Hygon and Feiteng are growing fast,” Han said. “With better support from its Chinese partners, Qualcomm could have more resources to invest in areas like 5G.”