“Dense servers” provide a huge growth opportunity for AMD

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What are dense servers?

Dense servers are part of the computing segment. They’re mainly used in data centers. Dense servers are high-powered, low-heat computer servers. When they’re compared to traditional servers, they improve space efficiency for data centers. AMD’s (AMD) dense server products include the SeaMicro SM15000™ server and AMD’s SeaMicro Freedom™ Fabric Storage series.

If AMD dense servers do well, it would benefit exchange-traded funds (or ETFs) like the SPDR S&P Semiconductor ETF (XSD) and the iShares PHLX Semiconductor ETF (SOXX). These ETFs have significant exposure to AMD.

DENSE SERVERS

Diversification into ARM architecture

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Intel (INTC) dominates the server space. To diversify and reduce its risks, AMD ventured into ARM architecture. ARM chips are more power efficient than x86 chips. When organizations deploy these servers, it reduces their costs. Current 28nm ARM chips have low 20W–90W thermal design power (or TDP)—compared to the greater than 100 TDP of Xeon chips. NetNames is based in Europe. It’s an online brand protection and digital asset management company. It deployed AMD’s SeaMicro15000. This resulted in cost savings of $1.5 million and an 83% reduction in physical rack space. Verizon (VZ) also chose AMD’s SeaMicro SM15000™ servers to drive its public cloud.

Accelerated demand for datacenters

Increased internet penetration and dramatic growth in smartphones and tablets provided AMD with an opportunity to enter the world of dense servers. Power savings, efficiency, and performance are equally important.

Seattle—the first 64-bit ARM-based server processor

By the end of 2014, AMD plans to launch the AMD Opteron A-Series processor titled “Seattle.” It’s the first 64-bit ARM-based server processor. There’s another server in the pipeline titled “Cambridge.” The Seattle processor is a key part of AMD’s “ambidextrous computing” strategy. It combines ARM and x86 platforms to meet a variety of data center demands. It also shows the growing preference of ARM’s low-power chip designs for dense servers.

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