Qualcomm Inc (NASDAQ:$QCOM) data center chip is on track for distribution in the coming months. They are currently dominating the semiconductors sector when it comes to smartphone applications processors. Qualcomm isn’t seeing much competition from other semiconductor companies when it comes to smartphone chips. As a result, tech companies that produce smartphones — unless they can and want to build their own processors that could surpass Qualcomm’s — will most likely be using the semiconductor company’s chips.

However, just because it isn’t facing heavy competition doesn’t mean that Qualcomm hasn’t been improving its various smartphone chips. The company has been working to transfer some of its key technologies from its high-end smartphone chips into its mid-range and low-end smartphone chips. This means that not only could Qualcomm see positive sales for its high-end smartphone chips, it can see an improvement for the sales of its mid-range and low-end chips as well.

Although Qualcomm has been doing well in holding its dominance in the smartphone market, this may not be so beneficial for the company anymore. This is because many believe we have surpassed the biggest growth period for smartphones. As Qualcomm comes face to face with this reality, it is now also working towards improving its chips for other markets to help keep up with company growth.

One particular market Qualcomm has been working towards is chips for data centers. The company is doing so by developing a new chip called the Centriq 2400. During the company’s most recent quarterly earnings call, Qualcomm CEO Steve Mollenkopf ensured investors that the chip is on track for distribution by the end of 2017.

The data center chip market is currently being dominated by Intel (NASDAQ:$INTC), and thus Qualcomm’s biggest competitor regarding this area.

The Centriq 2400

A 48-core chip, the Centriq 2400 was specifically made for data center applications. Mollenkopf noted that Qualcomm has already sent about 1,000 of the chips to customers and partners for testing and feedback.

“We continue to be encouraged by the engagement with and feedback from our growing list of customers and partners as to the performance of our product,” Mollenkopf said.

What this means for Qualcomm

If Qualcomm is able to begin distributing the Centriq 2400 by the end of 2017, investors can expect its contribution to revenue to begin to show up in earnings reports throughout 2018. However, investors shouldn’t expect much of a change to revenue as the Centriq 2400 a first for this line of chips and Qualcomm still faces heavy competition from Intel.

Investors may want to keep an eye out for Qualcomm’s progress of its data center chip efforts. If the Centriq 2400 is successful despite competition and make a strong and steady gain in market share yearly, it could make for some interesting earnings for Qualcomm and perhaps even a shake-up in the semiconductor industry.

To be clear, however, investors shouldn’t expect this success to be achieved overnight. As well, it is still uncertain whether or not Centriq 2400 could generate any traction at all. Qualcomm is entering a business that’s been heavily dominated by another semiconductor company, so its path to potential success may be slow.

Featured Image: twitter