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Texas Instruments: Taking on Intel in the Datacenter

 November 20, 2012 01:23 PM

(By Mani) Texas Instruments, Inc. (NYSE: TXN) recently introduced six 28nm new multi-core system-on-chips (SoCs) targeting a new market – cloud data centers.

These parts are clearly the first round of custom silicon development based on ARM cores, which threatens Intel Corp. (NASDAQ: INTC). The goal of these products is to break into the high performance but low power segment of the cloud data centers.

While the overall impact of ARM cores into the server and data center market will only be measured over the next 5 years, competition is heating up.

[Related -Advanced Micro Devices, Inc. (AMD) Reports Today: The Game's Afoot]

"We expect to hear more from other ARM SoC suppliers as they deploy the more powerful ARM cores into the high margin server market," RBC Capital Markets analyst Doug Freedman wrote in a note to clients.

The chips introduced use Cortex A15 cores and not the recently introduced A53 and A57 64bit cores. TI's six new high-performance SoCs are based on the KeyStone multicore architecture.

Together, these processing elements, with the integration of security processing, networking and switching, reduce system cost and power consumption, allowing developers to support the development of more cost-efficient, green applications and workloads, including high performance computing, video delivery and media and image processing.

"We are most focused on the memory support these products offer as that is key to the range of workloads they can support," Freedman said.

[Related -Intel Corporation (INTC) and 5 Other Stocks That Could Pop on Earnings This Week]

The company claims a 50 percent improvement in memory bandwidth, but it is measured against other reduced instruction set computer (RISC) solutions, not Intel's X86 offerings. RISC is a type of microprocessor architecture that utilizes a small, highly-optimized set of instructions, rather than a more specialized set of instructions often found in other types of architectures.

However, the latest chips were impressive with the small, but effective list of software suppliers that are supporting these new chips. In addition, the pricing is clearly able to be disruptive with $30 to $49 starting points. The speed ranges are also impressive with 850Mhz to 15GHz speeds mentioned.

"We suspect a bit of marketing in the 15GHz number as that does not likely compare to Intel's 4GHz clock speeds.

On the flip side, the release was missing a major server or data center OEM partner highlighting market acceptance of these solutions. These products will require workload porting from other platforms as they are not compatible with other RISC or x86 solutions.

Meanwhile, the next-gen A5X SoCs are targeted at multi-GHz performance (smartphones to servers) on advanced CMOS and FinFET processes technologies. Its capabilities are designed to foster a seamless transition from 32-bit to 64-bit execution state. 

"A5X solutions are expected to be in the marketplace in 2014, as licensees include Advanced Micro Devices (NYSE:AMD), Broadcom Corp. (NASDAQ:BRCM), Calxeda, HiSilicon, Samsung and STMicroelectronics NV (NYSE:STM)," Freedman said.

However, Dallas-based Texas Instruments is not likely to get credit as a supplier of Data Center processors until they announce material design wins. Likewise, Intel is unlikely to see multiple expansion until investors grow comfortable knowing that the ARM server threat is limited and that Intel can continue to count on above average growth and margins from the server and data center segment.



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