Intel Corp is taking a new approach to the powerful server chips it sells to Internet heavyweights like Facebook and Google.

The Santa Clara, California company is integrating its Xeon processors with programmable chips that will give customers with unique technical requirements more flexibility to optimize their servers.

With a stagnant PC industry and little progress in smartphones and tablets, selling high-end server chips is an increasingly 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 of those processors to meet the particular needs of high-end customers like eBay and Facebook.

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

The technology Bryant announced at an event Wednesday goes a step further, letting data center operators customize the chips themselves, as often as they want.

Intel dominates the server market but it faces a new source of competition as rivals prepare low-power processors based on technology 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 servers faster at handling proprietary tasks, like providing web-search results or updating social networks.

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

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

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

Programmable chips are typically used by manufacturers making small quantities of products or prototypes that do not warrant the expense of designing a new chip from the ground up. On Wall Street they are used to run complex financial simulations.

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

Intel announced in March it was expanding its existing contract manufacturing relationship with programmable chipmaker Altera to develop future components that combine different kinds of chips. Bryant said that arrangement was unrelated to the upcoming Xeon offering. 

(Reuters)