Advanced Micro Devices, Inc. (NYSE:AMD) to strengthen server business

A slump in the sales of personal computers is prompting Advanced Micro Devices, Inc.(NYSE:AMD) to shift to servers as its primary customer base.

The company has been traditionally strong in the server market and it plans to consolidate its position there further.

On Monday, AMD said that it would develop 64-bit server processors based on technology provided by ARM Holdings and Sea Micro, which is the company that AMD purchased earlier this year.

The server and data centre market has seen strong growth as there is a perceptible shift to the cloud, where business can access computing power through a network instead of in-house data. This leads to a reduction in costs.

“There’s no doubt that the cloud changes everything,” AMD Chief Executive Rory Read said a presentation in San Francisco.

Lisa Su, general manager of AMD’s global business units, also noted that “the data centre is fundamentally where the growth is going to be.”

For British chip maker ARM Holdings, which is dominant in the smartphone and tablet segment, it provides a way for it to expand further in the PC and server market.

Analysts are however a bit sceptical about AMD's push into the server market and its contribution to its revenues and profitability as they feel that its core business of personal computers is collapsing.

Sales of personal computers are seeing a slowdown as more customers are opting for mobile devices for their daily computing needs. As mobile devices get more powerful, the lines are blurring between traditional computing devices such as laptops and tablet PCs.