ARM.L Share News (ARM)

By Noel Randewich

SAN FRANCISCO, June 18 (Reuters) - Intel Corp istaking a new approach to the powerful server chips it sells toInternet heavyweights like Facebook and Google.

The Santa Clara, California company is integrating its Xeonprocessors with programmable chips that will give customers withunique technical requirements more flexibility to optimize theirservers.

With a stagnant PC industry and little progress insmartphones and tablets, selling high-end server chips is anincreasingly important source of profits for Intel.

Most servers are made with off-the-shelf Intel Xeon chips,but last year Intel manufactured about 15 customized versions ofthose processors to meet the particular needs of high-endcustomers like eBay and Facebook.

It plans to manufacture over 30 customized chips this year,Diane Bryant, who leads Intel's data center division, toldreporters at a briefing this week.

The technology Bryant announced at an event Wednesday goes astep further, letting data center operators customize the chipsthemselves, as often as they want.

Intel dominates the server market but it faces a new sourceof competition as rivals prepare low-power processors based ontechnology from ARM Holdings.

The new component integrates a standard Xeon processor and a chip known as a field-programmable gate array, or FPGA.Customers can configure the chips as needed to make serversfaster at handling proprietary tasks, like providing web-searchresults or updating social networks.

"If they have an application that spends a lot of time on aparticular algorithm, they can take that algorithm, take thesoft (intellectual property), and load it into the FPGA andaccelerate that workload," Bryant said.

Intel already sells server products that combine Xeon chipsand programmable chips but on the new component they will bemuch more closely integrated, resulting in up to double theperformance, Bryant said.

She declined to say when Intel would sell the new product,how much they would cost or what company would supply theprogrammable chip, a technology distinct from Intel's focus onprocessors.

Programmable chips are typically used by manufacturersmaking small quantities of products or prototypes that do notwarrant the expense of designing a new chip from the ground up.On Wall Street they are used to run complex financialsimulations.

Microsoft has already been experimenting with usingprogrammable chips to help power its Bing web search engine.

Intel announced in March it was expanding its existingcontract manufacturing relationship with programmable chipmakerAltera to develop future components that combinedifferent kinds of chips. Bryant said that arrangement wasunrelated to the upcoming Xeon offering. (Reporting by Noel Randewich; Editing by Diane Craft)