The cloud is the fiercest front in the chip wars

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The cloud is the fiercest front in the chip wars
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As the cloud has billowed, so has competition. Today the market for server processors is getting bigger, more crowded and more complex

Save time by listening to our audio articles as you multitaskRooms of servers began to replace computer mainframes in the 1990s. Back then, they were owned by companies and installed on their premises. They mostly ran on chips made by, the big tech of the day. These were supplanted by processors from Intel, which by the mid-2000s translated its dominance ofsemiconductors into a near monopoly of the server market.

Today the market for server processors is getting bigger, more crowded and more complex. Intel, which both designs and manufactures semiconductors, derives 33% of its revenues from server chips, up from 29% in 2016. Specialist chip designers that do not do their own manufacturing are expanding their server-chip businesses even more quickly. Data centres now account for 39% of the sales of Nvidia, up from 7% six years ago.

The second reason for the upheaval is the growing sophistication of what the cloud does. It no longer acts merely like a large external hard drive. It is bursting with new capabilities that require different chip architectures. In some cases, that means repurposing existing technology. Nvidia’s cloud business is built atop its graphics processing units , specialised chips used to make computer animation lifelike.

Ironically for a hardware business, another big chunk of the cloud-chip spoils may end up with firms that offer the best software. Nvidia’s popular programming language,, already makes it easier for developers to boost the performance of its chips. For now, the cloud giants seem content to work with Nvidia rather than try to compete with its specialised software. But they are first and foremost software firms, so this peaceful co-existence may not last for ever.

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