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Calxeda, an early player in delivering low-power server chips based on ARM’s custom architecture, has closed its office and laid off almost all of its 130 or so employees, according to a statement that a spokesman sent to VentureBeat.

According to the statement, funding fell out from underneath Calxeda, and it sounds like interest in the Texas-based company’s products was not strong enough.

AllThingsD first reported earlier this afternoon that the company was shutting down.

Here’s the statement Calxeda’s vice president of marketing, Karl Freund, sent to VentureBeat:

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The restructuring will determine what happens to the assets and people. For now, we have closed our office and sent everyone home except a few people to continue to support our customers. We have about 130 employees. The product remains available and will be sold/serviced by whatever company takes shape after the restructuring.

The market is just materializing, and its a shame that we simply ran out of money at this time. The financing we thought we had lined up disappeared quite suddenly and we ran out of runway to put another deal together.

Freund later noted clarified in an email that the employees were “laid off except a small team here in and in China where we are finishing a project.”

The company’s most recent funding announcement came in October 2012, with a $55 million raise from Austin Ventures, Vulcan Capital, and other investors.

But even if investors lost confidence in Calxeda, this doesn’t mean the general direction the company has pursued isn’t valid.

In an emailed note he sent to VentureBeat, technology analyst Patrick Moorhead of Moor Insights & Strategy pointed to recognition from Intel and other vendors of the need for cheaper and less powerful CPUs, including system-on-chips (SOCs):

Generally, there is a need for lower priced, fabric-connected processors out there. Intel has stepped up to the plate with Atom and their future SOC-based Xeons, but it will be hard to hold back the 10 specialized ARM-based server makers from making some kind of impact on the market. In the end, most of this is about pricing with intel, but there is also an element of specialization that ARM-based architectures can bring.

Data center operators seem to be supporting the idea of buying more servers that each use less power, with the assumption that some will inevitably fail.Big public clouds provide the ideal example for this architecture. Facebook likes it, too. Facebook infrastructure executive Frank Frankovsky recently joined Calxeda’s board of directors, and the social network has recently shown interest in depending more on ARM processors. But perhaps the value proposition the company was articulating just wasn’t strong enough.

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