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AMD closes $293 million deal for x86 architecture

Posted: 22 Apr 2016 ?? ?Print Version ?Bookmark and Share

Keywords:next-generation server SoCs? PC market? data centre operator?

An investment firm in China will pay Advanced Micro Devices $293 million for technology and design services that will enable a joint venture to build next-generation server SoCs for the China market.AMD will proceed to licence technology to make x86 server SoCs to a China partner.

The deal gives AMD a needed infusion of cash and a partner in the world's second largest and fastest growing server market. However details about the deal are scarce and could draw fire from Intel with whom AMD signed in 2009 a detailed patent cross licence.

AMD's China partner is Tianjin Haiguang Advanced Technology Investment Co., Ltd. (THATIC), one of many financial holding companies with ties to China's Academy of Sciences (CAS). THATIC paid AMD about $52 million this quarter which triggered the company's need to provide information about the joint venture.

Little is known about THATIC or the joint venture which aims to remain secretive until it is closer to having products ready. The group is listed as one of many investment firms in which CAS has a stake. THATIC also has ties to Dawning Information Industry Co., Ltd. which has made world-class supercomputers based on x86 processors.

The deal is expected to be based on AMD's next-generation x86 architecture called Zen. Even AMD is not expected to ship Zen-based server chips in volume until next year. The joint venture is likely to take even longer to assemble a team, design and ship its SoCs.

An AMD spokesman said the joint venture's products "are expected to complement AMD's x86 server offerings." AMD will also receive royalty payments from the JV's future product sales.

The deal is the first fruit of a plan to start a licencing business that AMD's chief executive, Lisa Su, has been talking for several months. It is a much needed shot in the arm for AMD as its core business in PCs declines.

AMD has reported losses and declining revenues for several quarters. It laid off 5% of employees last fall and sold a packaging operation to a China firm.

Despite the licencing revenue, AMD lost $109 million on revenue of $832 million this quarter. This week Intel announced it will lay off 12,000 employees, in large part to compensate for a PC market it said will decline in high-single digits this year as it focuses on growth markets such as servers.

The China deal "is awesomeI believe this is based around Zen and as such this is a huge endorsement for what AMD has with Zen," said Nathan Brookwood, principal of market watcher Insight64 (Saratoga, Calif.)

"No one's banking on AMD announcing blow out financial quarters anytime soon, in fact the question is whether Zen make it and this lays that to rest in a big way," said Brookwood.

More importantly, "now there will be indigenous China-based x86 server designs," he said.

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