Qualcomm hit another milestone in its multi-year effort to challenge Intel's dominance in the data center semiconductor market, naming the first customer trying out its server chips.

Qualcomm and Microsoft said they were teaming up to use Qualcomm's new Centriq 2400 data center semiconductors with a Microsoft cloud-computing software platform that the Seattle company uses for its own internal data centers.

Microsoft also said it was working with San Jose-based Cavium on data center processors. Both Cavium and Qualcomm use chip architectures from ARM Holdings that are common in smartphones.

ARM-based processors "provide the most value for our cloud services, specifically our internal cloud applications such as search and indexing, storage, databases, big data and machine learning," said Leendert van Doorn of Microsoft's Azure unit, in a blog post.

Intel builds data center semiconductors based on chip architecture common in personal computers. It currently has nearly 100 percent market share in the data centers -- warehouses of connected computer servers that power the Internet cloud, big data analytics and other things.

Intel said in a recent interview that it takes all competitors seriously. While hype about ARM-based processors in data centers has been around for several years, there have been few deployments.

Data center operators, however, are believed to be seeking alternative suppliers, which presents an opening Qualcomm and others.

"In collaborating with Microsoft and other industry leading partners, we are democratizing system design and enabling a broad-based ARM server ecosystem," said Ram Peddibhotla, vice president of product management for Qualcomm Datacenter Technologies, in a statement.

Qualcomm's foray into server chips highlights how it and Intel are increasingly squaring off in the core markets that each dominate.

Best known for its smartphone technology, Qualcomm has been working on data center semiconductors since 2014. In December, it announced the Centriq 2400 would be available for potential customers to test this year.

Meanwhile, Intel won a cellular modem slot in some Apple iPhone 7 models last year, replacing Qualcomm on AT&T's and T-Mobile's networks. It was Intel's first significant win in mobile, lending credibility to its long-sought smartphone ambitions. Qualcomm retained Apple's business for iPhone 7s sold on Verizon's and Sprint's networks.

Qualcomm's shares ended trading Wednesday up nearly 2 percent at $57.77 on the Nasdaq exchange.