Mercury News heard from analysts that a company called Applied Micro Circuits has a good shot at hurting Intel's chip profits. Three years ago, the firm began developing an energy-saving ARM-based server chip designed to take care of the needs of Internet firms like Facebook and Google.
Anticipating a tectonic shift in the way data is shuttled across computer networks, Applied Micro Circuits three years ago began developing an energy-saving server chip that targets the needs of Internet-based companies such as Facebook and Google (GOOG). Now the product is nearing the market, and Intel, which dominates this part of the chip industry, is preparing for battle.
"Applied is a significant threat," said Raymond James analyst Hans Mosesmann. Even though its $195 million in annual sales and 649 employees are dwarfed by Intel's $53 billion and workforce of 105,000, Intel, he said, "will lose market share."
The competition comes at a tough time for Santa Clara-based Intel, a storied Silicon Valley company that has led the PC-chip business for decades. Its sales surged for years but have flattened out in recent quarters as consumers shunned PCs for smartphones and tablets.