In line with its IDM 2.0 strategy, Intel, a renowned technology company, has declared its departure from the server business and has decided to sell its Data Center Solutions Group (DSG) to MiTAC. The objective of this move is to shift the focus of the company towards prioritizing investments in future components and silicon technologies. While the decision to exit the server business may surprise some, it has been in the works for some time and is consistent with Intel’s broader strategic vision.
Intel has been a significant player in the server industry for over two decades but has faced increasing competition from companies like AMD and the shift toward cloud computing. Intel has divested its server business to prioritize future component and silicon technologies as part of its IDM 2.0 strategy.
This move allows Intel to concentrate more resources on research and development in these areas, ensuring its long-term success in the semiconductor industry.
The decision to sell its server business to MiTAC is an interesting one. MiTAC is an edge-to-cloud IT solutions provider that has been a longstanding ODM partner of DSG. By selling the business to MiTAC, Intel effectively allows it to manufacture and sell products based on its designs. This move will ensure that Intel’s server customers will continue having access to products based on Intel’s designs while freeing Intel from the burden of manufacturing and selling these products.
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It is important to note that Intel’s decision to exit the server business does not mean the company is leaving the data center market altogether. The company will continue offering products such as CPUs, memory, and storage devices used in data center environments. However, by divesting its server business, Intel can focus more on these core areas and avoid the distractions of manufacturing and selling server hardware.
This decision is not the only significant change that Intel has made recently. To save costs, Intel has been divesting its non-core businesses, including the Optane business, which resulted in a $559M loss, as well as its Barefoot network switches and 5G modems.
While Intel’s decision to exit the server business may surprise some, it is not entirely unexpected. The company faces increased competition in the server market and needs help maintaining its market share. Additionally, the rise of cloud computing has led to a shift away from on-premises server infrastructure, further impacting the demand for Intel’s server products.
By divesting its server business, Intel can focus more on developing future components and silicon technologies, which it sees as critical to its long-term success. It is unclear what the consequences of Intel’s decision to divest its server business will be for the server market.
While MiTAC, the company that acquired Intel’s server business, is a smaller player in the industry, it is uncertain how it will compete with larger rivals such as Dell, HPE, and Lenovo. Furthermore, customers may be apprehensive about the quality and dependability of products manufactured by MiTAC.
Nonetheless, Intel’s decision to allow MiTAC to produce and sell products based on its designs ensures that its customers will still have access to products that utilize Intel’s technology, even if the company is no longer directly involved in the server business.
According to an Intel spokesperson’s confirmation to ServeTheHome, MiTAC, an IT solutions provider and an ODM partner of Intel’s Data Center Solutions Group, will be privileged to produce and sell products based on Intel’s designs as part of the transition. Intel is focused on supporting the DSG team and its stakeholders during this period.
This move by Intel is in line with its IDM 2.0 strategy, which was announced in 2021. The strategy involves Intel investing heavily in its manufacturing capabilities and partnering with other companies to manufacture its chips. By selling off its server business, Intel can focus on its core competencies and invest in future technologies.
It’s worth noting that Intel has been divesting itself of various businesses and products over the past few years. In 2018, the company sold off its Wind River Systems software business; in 2019, it sold its smartphone modem business to Apple. The company has also been cutting costs and restructuring its operations to improve profitability.
Although not a major component of Intel’s business, its server division did have distinctive characteristics that distinguished it from other server manufacturers. For example, Intel was one of the first to offer servers with NVMe storage options, providing faster data access than traditional storage technologies.
Intel’s Xeon Platinum 9200 series server models were equipped with liquid cooling technology, which improved their performance and reduced power consumption.
Despite these innovations, Intel’s server business faced stiff competition from companies such as Dell, Hewlett-Packard Enterprise, and Lenovo, all of which have larger market shares in the server industry. By selling off its server business, Intel can focus on its strengths in the semiconductor industry, where it is a leading player.
Pending regulatory approvals, the sale of Intel’s server business to MiTAC is anticipated to be finalized in the latter half of 2023. What the future holds for Intel’s former server business under MiTAC’s ownership remains to be seen. Still, the focus is on ensuring a smooth transition for employees and stakeholders.