- Canaccord's Matthew Ramsay has launched coverage of AppliedMicro (AMCC) with a Buy and $16 PT, and on fellow ARM (ARMH) server CPU play Cavium (CAVM) with a Buy and $62 PT.
- Ramsay sees ARM designs grabbing 20% of a 2018 server CPU market he expects will be worth $19B (up from a current $12B).
- Though software support and the dominance of Intel's x86 CPUs act as challenges, there's plenty of optimism about the ability of ARM designs to address demand for low-power CPUs for hyperscale deployments, as well as to cater to application-specific niches better than general-purpose Intel CPUs.
- Cavium is going after the latter opportunity with its Project Thunder CPUs - Ramsay expects strong sales growth starting in 2H15. In the near-term, he expects a 50% 2013 increase in Cavium's core network processor design wins to drive 20%+ revenue growth.
- As for AppliedMicro, he sees the early lead for the company's X-Gene ARM CPUs - parts have been sampling for nearly a year, and plenty of software testing has been done - allowing AppliedMicro to hit its target of doubling quarterly sales by the end of 2016.
- Cavium recently unveiled ThunderX, a next-gen solution supporting up to 48 home-grown ARM cores (requires a costly architectural license) - chips meant specifically for networking, storage, and security hardware will be offered. AppliedMicro is prepping next-gen X-Gene CPUs supporting up to 16 cores.