Red Hat is teaming with ARM and Applied Micro Circuits to help develop a new chip the companies believe will costs for servers utilized in cloud computing, data centers and enterprise networks.

Financial terms of the agreement weren’t disclosed.

Red Hat (NYSE: RHT) is a global leader in Linux open source-based server software. Its Enterprise Linux, for example, is used by many firms on Wall Street.

ARM and Applied Micro Circuits are developing the technical side of the chip, which would differ from standard processors built by Advanced Micro Devices and Intel.

The new chip would be capable of power 64-bit processing.

The partners call the new chip design as “disruptive” and that it would “dramatically lower” cost of server ownership.

“We have a multi-year history in the ARM space, and already have our community-powered Fedora Linux distribution running on AppliedMicro hardware in our labs,” said Jon Masters, Chief ARM Architect at Red Hat. “Red Hat is collaborating with AppliedMicro to enable support for ARM’s 64-bit ARMv8 architecture used in the upcoming X-Gene Server-on-Chip designs. We aim to have a remix of Fedora 19 available in time to support the roll out of that platform.”

The chip, called X-Gene Server of a Chip,” is “purpose-built for cloud computing.” It utilizes ARM 64-bit architecture.

“The X-Gene platform is designed to enable web front end, big data, search and grid farm applications at a price/performance level previously not seen,” said Vinay Ravuri, general manager, X-Gene, AppliedMicro. “Open source is a key piece of the equation that, when combined with our fully integrated, purpose-built Server-on-Chip, delivers the cost efficiency, power and performance needed to serve evolving data center workloads. We believe this collaboration with ARM and Red Hat will transform the cloud server market.”

Red Hat plans a briefing about the chip and Red Hat support on Nov. 1 at an ARM conference.

Red Hat is based in Raleigh.