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It appears that the Korean electronics giant Samsung will soon be entering the server chip market. The company has been picking up key personnel from Intel Corp. ( INTC - Analyst Report ) rival, Advanced Micro Devices ( AMD - Analyst Report ) that clearly point to a growing interest in servers.
So far, Samsung has focused on developing chips based on ARM architecture and stayed clear of the x86 architecture used by Intel and AMD. It is expected that the company will continue to do so in future.
However, to make a mark here, the smartphone giant will need to do much more than hiring engineers and other senior officials at its R&D facility in Austin, Texas. It will have to deliver products that are not only energy- efficient, but also cost effective and powerful, in order to gain customer confidence and pick up share from market leader Intel.
Specifically, Samsung’s latest recruits include veterans of the chip business like Jim Mergard (16-year veteran, VP, Chief Engineer AMD), Frank Helms (Fusion APU architect), Brad Burgess (Bobcat APU Architect) and Patrick Patla (VP of AMD’s server business).
Patla, in particular, is expected to be an important asset, since he was behind the success of the Opteron chip set with a proven record of accomplishment in the x86-server system and silicon industries. He has 20 years of experience in development and execution of product planning, market sizing, territory management, technical sales, training and support.
Intel’s traditional rival in the space is AMD. The two companies have been fighting it out for some time now, with AMD making its only major headway versus Intel in 2006, when its new Opteron line proved very popular. However, Intel fought back extremely well, limiting AMD to a market share in the teens, while continuing to hold a market share of over 80%. Given the brain drain at AMD, the company could be in for trouble in the following quarters.
The Zacks Rank on Intel shares is currently #2, implying a short-term Buy recommendation, while that on AMD shares is #3, implying a short-term Hold rating.
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