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Calxeda, the Austin, Texas-based company with the first ever chip capable of running an entire server at a mere 5 watts, just announced a $55 million fund-raise.

“Businesses require a more efficient solution for the Web, Cloud, and ‘big data,'” Barry Evans, the company’s CEO, explained in a statement.

This is one of the largest venture deals for a semiconductor company this year, signaling that low-power server technology increasingly has a hold on the market. With this influx of cash, the company has raised a total of $103 million.

For industry analyst Patrick Moorhead, this is an important step for a company with a rack-focused approach. ‘”This investment in Calxeda gives a lot more credibility to the ultra-low power server category in the largest data centers, known as mega data centers,” said Moorhead, the president of Moor Insights and Strategy

“Their biggest investments are in their connective fabric and the management software [which] are starting to pay off, ” he added.

Calxeda launched in January 2008. Four years later, it can deliver up to a ten-fold improvement in energy efficiency compared to commodity x86-based servers. Since it’s based on ARM technology, its chips are similar to the low-power, yet highly capable, processors used in smartphones and tablets.

Read more about Calxeda lower-power server chip here.

The company said it will continue to use ARM technology to “slash data center power” and will use the funding to “accelerate adoption and innovation in the emerging market.”

“Calxeda thinks like a solution company, aligning their technology to solve the bigger challenges. They aren’t just chip guys,” said Steve Hall, the managing director, Vulcan Capital in a statement. Vulcan is the venture capital firm launched by Microsoft cofounder Paul Allen.

The funding round is led by Austin Ventures and Vulcan Capital with participation from the firm’s existing investors, including Battery Ventures, Flybridge Capital Partners and Highland Capital Partners.

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