For many years now, small chipmaker Applied Micro (NASDAQ: AMCC) has been vocal about its ARM-based server processor efforts, branded X-Gene.
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The company's first two generations of X-Gene processors -- X-Gene 1 and X-Gene 2 -- have seen limited adoption by major data centers. However, Applied Micro seems optimistic that its third crack at it -- X-Gene 3 -- will be more successful in the marketplace.
Image source: Intel.
X-Gene 3 "tapes out"
According to Applied Micro CEO Paramesh Gopi, the company "successfully taped out" X-Gene 3 in Taiwan Semiconductor Manufacturing Company's (NYSE: TSM) 16-nanometer manufacturing technology last quarter. This means the design was sent off to TSMC to be manufactured.
Gopi says that the company still expects that it will ship samples of X-Gene 3 processors to major customers before the end of March.
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If Applied Micro starts sampling to customers by this coming March, then it would be reasonable to expect volume shipments of the final product to start by March 2018, or about a year after sampling begins.
A big improvement over prior-gen X-Gene
Gopi claims that X-Gene 3 will provide a substantial boost in performance relative to the prior-generation X-Gene 2. "X-Gene 3 is expected to deliver six times the performance of currently shipping X-Gene product," Gopi said.
He went on to claim that X-Gene 3 is expected to go head-to-head with server processor market leader Intel's (NASDAQ: INTC) Xeon E5 and Xeon E7 processors "in a similar power [envelope]."
Applied claims "customer interest"
According to Gopi, the company is seeing "customer interest" for X-Gene 3 "as it offers socket level performance beyond [Intel Xeon] E5 and E7 class performance coupled with an industry-proven third-generation product family."
As far as the potential of X-Gene 3 to move the needle financially, Gopi cautioned that the company isn't expected to see a "big impact" to its revenue until the company's fiscal year 2018 -- a sensible claim, given the time it takes to go from providing product samples to volume shipments of the finalized product.
Taking a "wait-and-see" approach
Applied Micro has been talking about its X-Gene family of server processors for about half a decade now. Back in 2011, the company published a slide claiming that X-Gene would outperform Intel's then-current and future server processors by 1.5 to 3 times in comparable power envelopes.
The reality is that Applied Micro's X-Gene 1 chip got wrecked by a low-end Intel Atom-based processor that made it to market well before X-Gene 1 did.
Indeed, of the $41.78 million in revenue that the company brought in last quarter, only around $11.6 million came from the sale of computing products, including the ARM based X-Gene parts, as well as its embedded PowerPC-based products.
Putting this into context, last quarter Intel's data-center platform revenue was $4.164 billion. Intel says that "platforms incorporate various components and technologies, including a microprocessor and chipset, a standalone [system on a chip], or a multichip package."
Applied Micro's total computing revenue is what Intel would probably call a rounding error.
Considering Applied Micro's track record of overpromising and underdelivering with X-Gene, it might make more sense for investors to take a wait-and-see approach before buying the hype around X-Gene 3.
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