Chip designer ARM sees 20 pct market share in servers by 2020

* Sees share rising from less than 1 pct

* Increase in data traffic to push up demand

* Chips would be priced less than leader Intel (Swiss: INTC.SW - news) 's (Adds details, quotes)

By Michael Gold

TAIPEI, March 19 (Reuters) - British chip design firm ARM Holdings PLC said on Thursday its market share in servers may touch around 20 percent by 2020, up from less than 1 percent now, citing massive potential in the market for big data.

"This is a nascent market primed for growth," Ian Thornton, vice president of investor relations, told reporters and analysts during a briefing in Taipei.

The company's chip designs are used in 90 percent of all smartphones worldwide, including those from Apple Inc (NasdaqGS: AAPL - news) . It earns royalties from every chip sold.

The first servers sporting ARM-designed server chips were shipped in the fourth quarter from Hewlett-Packard Co. As firms like Google Inc (Xetra: A0B7FY - news) and China's Alibaba Group Holding Ltd collect and transmit more data, the need for servers to store that data will skyrocket.

Thornton said Intel Corp currently holds a more-than 90 percent share in server chips and that ARM would market its chip designs more cheaply than its main rival in this segment.

"The average selling price of an Intel server chip is about $600" versus $100 to $200 dollars for the equivalent ARM chip, Thornton said. Because there is no serious competitor at the moment, "Intel can charge what they like."

Thornton also said he sees ARM's overall royalties growing by 22 percent this year. (Editing by Biju Dwarakanath)