Smooth-Stone wants to beat up Intel in the server chip market

A chip startup hopes to dent Intel’s market share in servers by recruiting investors to help it build ARM based chips.

Companies from America, Europe and the United Arab Emirates, have invested $48 million into Smooth-Stone a start-up based in Austin, Tex. They hope the venture, which aims to modify low-power smartphone chips to run servers, the computers in corporate data centres will knock Intel off the top spot as this manufacturer and offer companies with vast data centres including Google, Facebook and Microsoft, great energy cost savings.

According to the Wall Street Journal and the New York Times, the company plans to exploit chip designs from ARM Holdings PLC, which are best known for their use in mobiles.  ARM designs offer low power consumption, and controlling power has become a major issue for companies that operate computer rooms packed with servers.

Barry Evans, the new venture’s chief executive, described the venture to the New York Times as the David vs. Goliath struggle ahead, he pointed out the company’s name is a nod to David’s weapon. “He approached things in a totally different way.

“His approach was efficient — one shot,” he said.

And it’s not only ARM, Battery Ventures, Flybridge Capital Partners and Highland Capital Partners that have joined the club with the Advanced Technology Investment Company, (ATIC) coming forward and saying it too will contribute.  

Based in Abu Dhabi, ATIC has already invested billions of dollars into the chip industry in the last two years. It took over the chip manufacturing business of Intel’s main rival, Advanced Micro Devices, through its majority ownership of GlobalFoundries, which has chip plants throughout the world.

Smooth-Stone has modified  ARM chips found in the most popular smartphones to handle jobs typically done on server computers using less power and lower costs, aimed at data centres.

Historically, Intel’s X86 chips have consumed a great deal of power, and Intel also has a muddied past, paying around $3 billion in the last 18 months in fines and settlements tied to charges of anticompetitive behaviour.

Smooth-Stone says it will knock this on the head giving companies better power at lower rates. It is thought the products will be available in two years.