Intel ships overhauled low-power chips for data centers

By Noel Randewich

SAN FRANCISCO, Sept 4 (Reuters) - Intel Corp has started shipping data-center chips that are based on a major overhaul of its low-power Atom line, in a bid to defend its territory from an incursion by British rival ARM Holdings Plc (Xetra: 913717 - news) .

The Santa Clara, California, company said on Wednesday the new Atom chips, which are meant for microservers, networking equipment and storage at major cloud-computing providers, perform six times better than previous versions.

Intel's chips dominate the PC industry as well as servers but the company has struggled to adapt its technology for smartphones and tablets. Most of those devices use low-power chips made by Qualcomm Inc and other companies using technology licensed from ARM Holdings (LSE: ARM.L - news) .

Advanced Micro Devices Inc (NYSE: AMD - news) and other companies now plan to use ARM's technology to make low-power microserver chips for data centers, a market Intel is determined to defend. Intel's new chips are made with the company's 22-nanometer manufacturing technology, which is at least a year ahead of rivals. The chips are based on a new microarchitecture called Silvermont.

"Data centers have always been a high-margin business. Microservers are a beachhead, and Intel is trying to kill the attacking army," said Gartner (NYSE: IT - news) analyst Sergis Mushell.

In May, Intel announced Silvermont, the first overhaul of the Atom chip line since it was introduced for notebooks in 2008 and eventually expanded to include versions for mobile gadgets, data centers and car entertainment systems.

The new Silvermont microarchitecture is analogous to redesigning an automobile engine that will be used in a range of car models with different features.

Silvermont is also the basis for Intel's new 22-nanometer Bay Trail tablet chips, shipping this month, and upcoming Merrifield smartphone chips.