One of the first companies that announced an ARM server chip, Calxeda, has folded operations and is now pursuing ways to repurpose or sell its intellectual property.

Calxeda commenced operations under the name Smooth-Stone in 2008 and raised more than $100 million [M] in capital from companies including ARM Holdings. The company early on conceived the idea of ARM processors as being low-power and cheaper alternative to x86 chips from Intel and Advanced Micro Devices (AMD), which are used in most servers today.

In 2011, it announced it was developing ARM-based chips with up to 480 cores for low-power servers. Its chip was used in servers from Boston Ltd. and was due in Hewlett-Packard’s Moonshot system later this year.

”The concept of a fabric of ARM-based servers challenging the industry giants was not on anyone’s radar screen when we started this journey. Now it is a foregone conclusion that the industry will be transformed forever,” Calxeda said in a statement sent via email.

Calxeda failed to find additional financing, and its board voted to shut down operations to preserve capital, said Karl Freund , vice president of marketing, in an interview.

Most of Calxeda’s 130 employees will be laid off, except for a skeleton crew that will deal with creditors and figure out how to proceed with the company’s intellectual property.

”We’re very proud of what we accomplished here,” Freund said. “It’s sad we couldn’t complete the job.”

AMD will start shipping ARM chips in the first quarter of next year, and AppliedMicro recently started taking orders for a developer board with its unreleased and ARM-based X-Gene chip. Both of those companies are putting their energy into developing 64-bit ARM processors, which are more relevant to servers. Calxeda had 64-bit ARM chips in the pipeline but ran out of funds.

Calxeda was “too early for ARM servers,” said Nathan Brookwood , principal analyst at Insight 64.

”They spent a lot of money of 32-bit ARM servers. The server market doesn’t want 32 bits,” Brookwood said.

But Calxeda’s departure doesn’t mean the end of ARM server chips, Brookwood said.

”Of the companies visible, AMD clearly has the lead,” Brookwood said. Samsung could get into the 64-bit ARM server chip market in 2014, he said.

Calxeda’s former employees could find jobs soon, Brookwood said. There are many opportunities for people with experience on the ARM architecture, which is used in most smartphones and tablets today.