How Qualcomm failed to take on Intel in server market

Qualcomm was one of the loud voices in the race to get ARM ready for the server market, but in less than a year the firm's once-promising server unit has hit rock bottom. Analysts saw Qualcomm as the best bet to make it into the server market with ARM-based solutions, but now the firm's key engineers are gone and its biggest potential customers are either looking elsewhere or going back to Intel. In a new piece, Bloomberg analyzes what went wrong.

Less than a year later, this once-promising business is in tatters, according to people familiar with the situation. Most of the key engineers are gone. Big customers are looking elsewhere or going back to Intel for the data center chips they need. Efforts to sell the operation -- including a proposed management buyout backed by SoftBank Group Corp. -- have failed, the people said. Jacobs, chief backer of the plan and the son of Qualcomm’s founder, is out, too.

The demise is a story of debt-fueled dealmaking and executive cost-cutting pledges in the face of restless investors seeking quick returns -- exactly the wrong environment for the painstaking and expensive task of building a new semiconductor business from scratch. It leaves Qualcomm more reliant on a smartphone market that’s plateaued. And Intel’s server chip boss is happy.