While Intel is best known in the server space for their processors, networking gear, and other components, the company also has a small but respected prebuilt server system business, the Data Center Solutions Group. However, as confirmed by Intel today, the days of Intel-built servers are coming to an end. As part of the company's broader strategy to move away from low-margin businesses, Intel now plans to stop selling servers and will sell the remains of the business to one of its partners, MiTAC.

In a story first broken by ServeTheHome, the server-focused website reached out to Intel for a comment regarding rumors of the sale. Intel, in turn, responded with an official comment, confirming that the rumors are true.

"In line with Intel's continued efforts to prioritize investments in its IDM 2.0 strategy, we have made the difficult decision to exit our Data Center Solutions Group (DSG). As part of this plan, MiTAC, an edge-to-cloud IT solutions provider and longstanding ODM partner of DSG, will have the right to manufacture and sell products based on our designs. We are focused on ensuring the DSG team and its stakeholders are supported during this transition."

Most of Intel DSG servers were sold outside of the U.S. and were particularly popular in South America, according to STH. While the company did not have a broad lineup of server systems, it could satisfy general needs and even offered machines based on its unique Xeon Platinum 9200-series CPUs for heavy duty and high-performance computing applications as well as systems with GPU and accelerator support.

Interestingly, but it looks like Intel has been winding down its server business for several quarters now. First, it ceased to push its Data Center Blocks and Data Center Systems systems, yet kept offering them. Secondly, it supplied QCT's Sapphire Rapids-based machines for evaluation to specialized press. Meanwhile, Intel does have its own Sapphire Rapids-based server machines.

After Pat Gelsinger became the chief executive of Intel, the company abandoned a number of businesses, including 3D NAND memory and SSD business, Optane SSD business, notebook modem business, and Barefoot switching business. This has been part of a broader effort by the company to focus on fewer core businesses, where Intel has more control and, ideally, greater profitability.

Exiting the server system business is, on the whole, one of Intel's less surprising moves. It is a highly-competitive business with far more limited margins than the individual components Intel provides. Or as ServeTheHome succinctly notes "Intel’s core, high-margin business here is selling silicon, not sheet metal."

Intel's DSG offerings should fit nicely into MiTAC's lineup of products. The ODM, which is also the parent company of Tyan, has a much larger share of the server market and multiple brands under which they can sell these systems. 

Sources: ServeTheHomeTom's Hardware

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  • StevoLincolnite - Thursday, April 13, 2023 - link

    In short, they are de-diversifying... Which opens the company up to being financially vulnerable if their core markets falter for any reason.

    Also makes me wonder how much longer they are going to stick with the GPU market... They have a track record of giving up quickly.
  • GreenReaper - Thursday, April 13, 2023 - link

    Better to fail fast than slow. Pat is selling to willing buyers at the current fair-market price, so that he may survive.
  • lmcd - Thursday, April 13, 2023 - link

    I struggle to consider this much diversity -- Intel's business here provided vertical integration but if the buyer chose against Intel for the chip, they chose against Intel prebuilts as well automatically. This is opposed to an "open market" end product builder like Samsung's mobile division, which chooses Exynos opponents regularly.
  • stanleyipkiss - Thursday, April 13, 2023 - link

    It's actually the fact that SELLING and ASSEMBLING servers is a VERY low margin business. Usually 2-3%. Why would they bother? When their core business wants 50% or more margin.
  • Bruzzone - Thursday, April 13, 2023 - link

    Apparently, Intel no longer needed the vertical taper to pull others along and in relation antitrust remedial by selling DCS to Mitac, Intel divested to separate itself from direct engagement with their long time (since 1990s) SA board cartel operation that Mitac will now be engaged as a partner clearing house essentially servicing (claiming) the South America IT enterprise and commercial systems integration markets. Interesting development. mb

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