Intel and ARM are in a technological battle over computing in data centers. And China is the battleground.
Today, Intel announced a new joint venture to design chips through a research partnership with Tsinghua University and Montage Technology Global Holdings. Intel will put $100 million into the venture. The deal arrives just after rival Qualcomm announced it would codesign ARM-based server chips in a $280 million joint venture with a province in China.
The competition between these tech giants is taking place against the backdrop of China’s own governmental positioning. The government wants to encourage local, Chinese-made technologies to both avoid being beholden to foreign suppliers and to alleviate fears that foreign-made semiconductors that could be targeted by spies from abroad.
Intel said that the university will develop a programmable chip that can be reconfigured to do different tasks on the fly. The university will also address “specific local requirements,” which is a little vague, but likely means that it will handle any concerns the Chinese government has with technology as it relates to things like encryption, tracking, censorship, and the Great Firewall.
In 2014, Intel pledged to invest $1.5 billion for a 20 percent stake in a holding company owned by Tsinghua Unigroup, which the university owns. Intel has already operated in China for decades, and said in October that it would invest up to $5.5 billion in a chip factory to make new kinds of memory chips.
Qualcomm, meanwhile, said it was setting up a joint venture with the province of Guizhou to make chips based on ARM’s architecture. Intel’s x86 chip architecture currently dominates the PC and server chip markets. Server chips generate about $16 billion a quarter for Intel. But ARM aims to use its low-power advantage to wedge its way into power-efficient servers, and Qualcomm is one of the licensees that wants to design such chips.
The local participation should help Qualcomm compete against Intel in China. On the other hand, the Chinese government has fined Qualcomm $975 million for what it deems anticompetitive behavior.
Whatever happens, it certainly looks like China is poised to be both a big customer and a big supplier in this market, and with today’s announcement, Intel is making it clear it wants to be a big part of that.
“This announcement answers a lot of questions on how Intel will compete for China’s datacenter market in an environment where Chinese companies want more control and a government who wants more of a say around security,” said Patrick Moorhead, analyst at Moor Insights & Strategy. “A lot of ARM’s and OpenPower’s server value proposition in China revolved around these very specific needs, so I’m really interested to see how this plays out.”
He added, “Unlike this announcement, ARM and OpenPower’s licensing model allows chip designers to pretty much change and modify everything about the chip. Intel is providing a Xeon processor, which can be added to a security chip, then combined in a module. Of note, placing the RCP (reconfigurable computing processor) on a module with a Xeon is really good for time to market, but versus a full chip integration, is also more expensive and could consume more energy. The Chine server chip space is heating up for sure and Intel has given its rivals yet another thing to contend with.”