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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?

China's server customers, including Web giants Alibaba, Baidu and Ten Cent may feel motivated to buy processors from a local suppler. The chips are the most expensive components in servers which represent one of the biggest costs for large data centre operators who use millions of them.

The AMD deal comes as the U.S. recently placed restrictions on sales to ZTE, one of China's largest communications OEMs, for allegedly selling systems to Iran. In such a climate ZTE and other large China server makers may welcome a local supply of the key parts.

The AMD deal is similar to one struck in mid-January by Qualcomm around its upcoming ARM-based server SoC. In that deal Qualcomm and China investors are pooling $280 million to form Guizhou Huaxintong Semi-Conductor Technology Co., Ltd., based in an area where China has and plans to build large data centres who could be customers for its chips.

Initially the venture will sell chips Qualcomm designs and makes. Later it will design derivatives of its own for China customers.

It's unclear if AMD's venture has any ties to any of China's data centre giants such as Alibaba, Baidu and Ten Cent. The trio defines hardware for its data centres through an effort called the Scorpio Project.

Separately, a China start-up announced last year plans to develop its own ARM-based server SoC. Phytium Technology Co. Ltd., founded in 2012, will pack 64 custom ARMv8 cores running at up to 2GHz into a 640mm2 die made in a 28nm processor.

Two years ago, IBM licenced its Open Power processor to Suzhou PowerCore which is developing chips for China server markers. At an IBM event earlier this year IBM showed prototype chips and servers based on the PowerCore chips but neither company nor its customers attended the Silicon Valley event.

Microprocessors represent one strategic technology in which China long has been hungry to have a stake. Under its so-called Big Fund, China planners are also trying to develop or acquire memory chip technology.

The country is one of the world's largest consumers of semiconductors, in part because it assembles the lion's share of the world's computers and handsets. However it makes only a tiny fraction of the world's chips today, a fact that creates a trade imbalance more significant than its oil imports.

If the rising number of China processor alternatives gain a foothold it could be a major setback for Intel which has staked its strategy in part on growth in cloud computing.

In January, Intel struck a server-chip deal with Tsinghua University and Montage Technology Global Holdings, Ltd. Under the deal Tsinghua will design a co-processor module and software for use with Intel's Xeon server chips. Montage will sell the resulting products in the Chinese market, starting next year.

Intel might challenge the AMD deal, however the China partner apparently already has access to the technology. The Intel/AMD cross licence was a five year deal that the companies failed to renew in 2015.

The licence granted rights "intended to cover only the products of the Licenced Parties." The heavily redacted document lists a dozen exceptions to its terms, most of them not made public. Intel declined to comment on details of the patent agreement.

"All the technologies licenced [to the China joint venture] are AMD technologies and there are no encumbrances," said AMD's Su. "We have closed the deal and have started execution on it," she added noting she also doesn't see any regulatory issues. (Recently, U.S. regulators have increased their vigilance in turning down high tech investment proposed by China.)

AMD expects to get half the $293 licencing fees before the end of 2017. Su said the China deal is not exclusive, and AMD will pursue other licence deals but no others are immanent.

- Rick Merrit,
EE Times


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