Semiconductor firm Qualcomm Inc., the largest supplier of processor chips for smartphones, is ready to give up on its plans to muscle in on the server chip business that’s currently dominated by its rival Intel Corp.

Bloomberg cited a “person familiar with the company’s plans” as saying that Qualcomm will either shut down its server chip unit completely or sell it to a new owner.

Qualcomm was hoping to persuade data center operators to power their operations with chips based on designs from U.K. firm ARM Holdings Plc. rather than Intel Corp.’s dominant x86 line. The vast majority of ARM chips are used in smaller, less energy-hungry devices such as smartphones and tablets, but Qualcomm has for the last couple of years been trying to make a case for their use in the data center too, where they can fetch much higher prices.

“The data center market is huge, only has a few competitors, and is very margin-rich,” Patrick Moorhead, principal analyst at Moor Insights & Strategies, told SiliconANGLE.

Qualcomm declined to comment on Bloomberg’s report, but the publication noted that Chief Executive Officer Steve Mollenkopf told analysts last month during an earnings report that the company is looking to reduce its spending on “noncore product areas.” Mollenkopf’s comments came less than a week after the company confirmed it would lay off about 1,500 employees as part of a push announced in January to cut annual expense by $1 billion.

Qualcomm’s noncore areas would likely include the server business, which Bloomberg said is a much smaller market than chips for smartphones and related devices as measured by unit shipments.

“Based on the company’s stated intention to cut $1 billion in expenses, I am sure it is doing a very extensive business and cost review, including mobile, IoT and data center products,” Moorhead said. “Given the data center business is new and not necessarily connected to IoT or mobile, I am sure it is getting a second set of eyes.”

Qualcomm would surely benefit from the savings it would make if it ceased its research and development of data center chips. But at the same time, it would hamper the company’s efforts to become less dependent on the smartphone market, which still provides the bulk of its revenue.

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