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The server CPU market has long been dominated by Intel (INTC 9.25%) and AMD (AMD 2.55%). Both companies make chips based on the x86 architecture. While there are other types of CPUs used for specialized purposes — think IBM mainframes — x86 reigns supreme in the data center. Software is compiled and optimized for x86 chips, which creates significant switching costs.
Qualcomm (QCOM 1. 94%) already tried once, without success, to introduce chips from the Arm architecture, which dominates the smartphone market, to the server market. Qualcomm’s Centriq server processors failed to gain traction when they launched in late 2017, leading the company to scale back its efforts in particular. Moving to Arm chips or combination architectures simply wasn’t worth it for primary server processor customers.
Qualcomm introduced its first processors for Arm-based PCs last year, and while they haven’t exactly been a flop, partly due to compatibility issues, Arm-based PCs are most likely here to stay. re-enter the server processor market with new chips.
According to a LinkedIn post, Intel veteran and a chief architect of the Xeon server processor family Sailesh Kottapalli is joining Qualcomm after nearly three decades at Intel. In December, Qualcomm disclosed in a job posting that its data center team was working on server products for data center applications. Kottapalli is expected to lead that effort.
Although Qualcomm’s PC chips have trouble running certain types of applications, such as games and emulation, they offer counterfeit functionality and efficiency. Qualcomm can leverage this work to conquer the data center market.
In 2018, Qualcomm had little chance of having good luck with its Centriq server processors. There was too much x86 inertia, and the software ecosystem was focused on the dominant architecture.
Qualcomm may have better luck this time around thanks to synthetic intelligence. Tech giants like Microsoft are spending copious amounts of cash to build entirely new AI knowledge centers, and some are even designing their own Arm-based processors. The software stack continues to evolve, and with Microsoft, Amazon, and others now supporting Arm-based server processors, there’s a lot more momentum in 2025 than there was in 2018.
Even if the environment is more welcoming to Qualcomm, the company will face the festival of potential customers’ internal chip design efforts, as well as any other company that enters the market. Nvidia is already promoting its Grace circle of familiar middle-of-the-art processors of knowledge. on the Arm architecture, and you may get more attached as Arm gains traction.
While Intel and AMD will face more problems if Qualcomm returns to the server market, both corporations have strong product lines that will be difficult to beat. Intel advanced its competitive positioning last year with its rugged Granite Rapids chips and efficiency-focused Sierra Forest chips, and this year it plans to use its next-generation Intel 18A production process for Clearwater Forest.
Meanwhile, AMD officially unveiled its Turin server processor family in October, which will reach 192 cores. The family includes one particular processor designed to act as a host node processor for an AI accelerator cluster. AMD’s next-generation server processors have been very fortunate, and the company will look to build on this progress.
Qualcomm appears to be preparing to return to the server CPU market. This time will be longer than last time as the environment is much more conducive to Arm-based CPUs, but the party will be fierce.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Timothy Green holds positions at Intel. The Motley Fool ranks and recommends Advanced Micro Devices, Amazon, Intel, Microsoft, Nvidia, and Qualcomm. The Motley Fool recommends the following options: short $395 January 2026 calls on Microsoft, short $27 February 2025 calls on Intel, and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.
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