Marvell on Monday announced a quad-core server chip, Armada XP, which is based on an Arm design. The chip puts Arm in direct competition with Intel and AMD, which currently offer chips based on x86 architecture for servers.

Arm licenses processor designs to chip makers like Marvell, Texas Instruments, Samsung and Qualcomm. Arm processors go into most of the world's smartphones and are making their way into tablets and servers. Arm has talked about entering the server market since 2008, and Marvell is one of the first to announce a server chip based on Arm designs.

Arm's low-power processors could provide better performance-per-watt than Intel or AMD chips, said Nathan Brookwood, principal analyst at Insight 64.

Arm-based servers could make a mark in the low-end server space, where applications don't require heavy computation, Brookwood said. For example, the servers could be well-suited for fast-moving Web transactions. Many Web servers rely on the Linux OS, which Arm processors support, he said.

"Intel is trying to get into Arm's territory with smartphone and tablet [processors], and Arm is trying to get into Intel's territory with low-end server [processors]," Brookwood said. "This will be an interesting battle over the next two to four years."