Calxeda, Chipmaker That Sought to Bring ARM Chips to Servers, Has Shut Down

Depending on whom you ask, the coming year is supposed to be the one during which server chips based on the ARM architecture that is now so popular in smartphones and tablets start appearing in servers.

If that in fact turns out to be true, it will be with one less player in the market. Sources tell AllThingsD that Calxeda, the Austin-based chip design startup that had raised somewhere north of $90 million in venture capital funding, has effectively ceased operations today.

A source said the company had sought to raise a fourth round of capital but was unsuccessful. “They just ran out of runway,” as one source put it.

The shutdown will idle nearly all of Calxeda’s roughly 125-strong workforce, who have been informed of the move. Some have already started changing their LinkedIn profiles to reflect that they’re now looking for new jobs.

It’s unclear exactly how the company will unwind its operations, or if it will file for bankruptcy. One asset it does have is intellectual property regarding the design of ARM-based chips for use in servers. A source said that Hewlett-Packard and Dell, both of which have been making plans to add ARM-based chips to new small server designs, may be considering a scenario where they buy out the company’s patents.

Calxeda last raised $55 million in a Series C round announced in October of 2012. Austin Ventures and Vulcan Capital led the round. Other investors include ARM Holdings (the British Company that is in charge of ARM chip designs), Highland Capital and Advanced Technology Investment Company, the Abu Dhabi-based investment fund.

The point of getting ARM-based chips into servers has a lot to do with the history of ARM chips. Since the beginning, ARM chips were intended for use in devices that required low power consumption, and so they’ve over time evolved into the preferred architecture for mobile phones and tablets.

A couple years ago they started showing up in PCs after Microsoft announced plans to create a version of Windows tweaked to work with ARM chips.

But recently the idea of moving ARM-based designs into servers, a market that chip giant Intel all but completely controls, has gained a lot of traction, and several companies — some startups, some more established — have sought to give it a go. SeaMicro, one of the startups, was acquired by AMD last year. The more established players include Applied Micro Systems, Nvidia, Marvell Technology and Samsung.

Calxeda was one of them, and last year pronounced confidently it had been working closely with several server companies. It had expected to have production systems ready by the second half of 2014.

Calxeda had high hopes. It told Data Center Knowledge in an interview last year that it was working with at least seven hardware manufacturers, including HP.

Update: I just got a statement from Karl Freund, Calxeda’s VP of marketing, and Barry Evans, its President, confirming the news: