AMD's Troubles and Why Qualcomm Should Buy
Earlier this week, we were treated to a warmed up rumor that AMD is apparently on the auction block and Dell may be buying the company and dramatically shift its business strategy.
As ente
rtaining as these rumors are and as easy they are to dismiss, there is a serious note to such stories. AMD has attractive assets, while it isn't exactly competitive at this time anymore. A deep-pocketed buyer with a complimentary set of assets could be very interested in AMD.
There is an interesting discussion in Silicon Valley among analysts that suggest that an acquisition of AMD isn't the stretch we believe it to be. Dell buying AMD would be big surprise, especially in the background that the company's core business are PCs and an acquisition of AMD would put Dell in the line of fire of Intel. As dependent as Dell is on Intel, that would be suicide. If there is a PC vendor that could be interested in buying AMD, it would be Apple -- if the company was to build its own CPUs, but that does not seem to make any economic sense for Apple.
The options
Here is another idea: What if there was an ARM vendor that wants to break out of the old? ARM itself is unlikely to leave its successful business model, but actual chip makers could be using AMD to protect themselves from the coming Windows on ARM era. There is a lot of knowledge in AMD and x86 may be an interesting diversification.
A quick look into the balance sheets of ARM licensees reveals that there are just two options and two companies that could afford to buy AMD and sustain a war with Intel. Samsung and Qualcomm. TI or Freescale may be interested as well, but their financial covers are too thin to swallow a company that could cost somewhere in the range of $10 billion. Qualcomm has about $10.5 billion in cash and Samsung has a bit more than $11 billion available in cash.
The chip manufacturing horse race is already led by Samsung and Intel as the two dominant semiconductor companies worldwide. Samsung and Intel are currently considered to be the only manufacturers that can drive chip manufacturing beyond the 20 nm node and they are believed to have enough financial resources to build the $6 billion+ fabs that are required to make such chips economically feasible. However, Qualcomm appears to be an even more interesting buyer.
Qualcomm acquired AMD's mobile graphics business a little over two years ago. The Imageon processor has since then dissolved into Qualcomm's mobile GPU business and the Adreno GPU series. There is already some business synergy.
Within 18 months, Qualcomm as well as other traditional ARM vendors such as TI will get a new opportunity with tremendous competition in the Windows ARM segment especially from Nvidia, which is putting out stakes for the lead in this market. As inexperienced as Nvidia may be in this field, as serious is the threat to ARM vendors: Nvidia will be using its chip building expertise and GPU know-how to become the leading ARM vendor for Windows systems. AMD could deliver invaluable technology for Qualcomm and provide business options to boost its ARM business and explore the x86 market. It would be a substantial risk for Qualcomm, but the company would not burn any bridges with Intel and could supply the funding for a more competitive AMD that would have to get much more nimble, however.
The AMD Perspective
On AMD's side, we know that CEO Dirk Meyer had to go because he did not react quickly enough to cater products to the tablet and smartphone market. While AMD maintains that there will be tablet processors available this year, the company has empty hands in a buzzing market right now -- a market that holds the promises of the biggest opportunities for processor makers in decades. Next to Meyer, COO Bob Rivet was also let go. There may be other reasons, but there is a slight chance that the company is being prepared for a substantial shift in product strategy.
What made me question the firing of Meyer was the fact that there aren't many executives that can successfully lead a company like AMD -- people that can sense trends and motivate employees with the necessary vision, talent and charisma. If you will, the AMD job with all its economic ups and downs and the continuous threat of being extinguished by Intel isn't exactly an any-type-CEO job. Especially in this critical stage for AMD, it may have been more effective if chairman of the board Bruce Claflin would have stepped on Meyer's toes to change the direction of the company. Claflin must already have a candidate in mind -- someone like EMC's Pat Gelsinger, who led the engineering of Intel's 486 and Pentium processor -- or he is simply cleaning out the company so it can be acquired.
Either way, we will see a pretty significant development for AMD soon. If Claflin fired Meyer without backup, the effects for AMD will be equally significant, albeit in a negative way: AMD is currently doing well financially and its CPU lineup looks promising, with the exception of the gap in the mobile range. However, we also know that it is part of AMD's culture to shoot itself in the foot when the company is doing well. Self-inflicted vulnerability has always been a part of AMD's history. Remember how dominant AMD was with Opteron and the Athlon X2 in 2004/2005? Back then, it was pure arrogance that punished AMD and allowed Intel to take back the technology leadership.
The statement that AMD will be acquired is as much speculation as it can be, but Qualcomm seems to be a company that could be very interested in doing just that. Are we seeing the final chapter of AMD as an independent company right now?
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This sounds a lot more promising than Dell buying AMD
Bulldozer is about to roll out. If it is good (and it looks good on paper) and if AMD changes strategy + AMD graphics, AMD's near future may be pretty good.
I had no idea Qualcomm had so much money. They would be a perfect fit for AMD!!!!
I think its just a rumor to at AMD bad humor about intel SB. But if not Samsung has the muscle to push AMD/ATI. Samsung and AMD/ATI = Kicks intel @@s.
I love AMD, but they seriously need a kick in the ass to get moving.
I've always thought that an IBM and AMD merger made a lot of sense. IBM gets back into personal computing and AMD gets IBMs manufacturing and R & D power.
IBM???
I have to agree that an AMD/Samsung combination would be incredibly powerful. As the article mentioned Samsung has a great deal of knowledge in the wafer fabrication area, which is a bit of a weakness of AMD's. Just look at how Intel has pressed it's manufacturing advantage to beat AMD by producing chips one fabrication node farther than AMD, allowing for more features and improved overclocking headroom. Samsung would add a great deal of engineering talent and R&D capital to AMD allowing for AMD to greatly improve their processor and GPU designs. And I don't think Samsung would mind getting a hold of AMDs x86 license.
That's a good point about IBM. IBM and AMD have done a lot of work together in past, so a buyout would make sense. In fact, IIRC, the design for AMDs first integrated memory controller was from IBM.
I have faith AMD will pull through.
I think that AMD is prime for being acquired:
-It's balance sheet is finally out of the red (at least sort of)
-New products that rock
-The stock @ anywhere under $12 bucks is undervalued in my opinion.
-A number of OEM's are switching to AMD products etc...
Good luck AMD!
IBM sounds nice, their RISC architecture is top noch in the powerpc versions or CBE ... but I doubt IBM wants to play around with barby dolls at their level. And between samsung and qualcomm i'd prefer samsung. But then again, if bulldozer is a win the 10bilion price tag will go up.
At least for me the article does not make sense. Somehow ARM makers should be afraid windows on ARM, because NVIDIA has IP in graphic cards. Go figure.
IBM is a service company. They have no manufacturing, neither AMD has. The Global Foundries are the manufacturer, but they are indipendent entity. I see no reason for anybody to spend so much as to acquire AMD right now, just to obtain some patents. The x86 lisence is revocable if AMD is sold, hence the possible acquirer will not even get x86 lisence...
Wow, Wolfgang that's two well researched poorly writen articles in a row.
Contradict much? Maybe you should do the research and let your kid daughter write just the facts, not your oppinions.
The chinese should buy it. Not only would it help advance their IP, it'll give them a major presence in the IC industry. Although they currently are developing their own processor right now, it is still a few years behind US base company. Acquiring AMD would do wonders for them. With their $ and exposure, AMD would be bigger than intel in no time.
it is just a rumor. that is it. A stinky dirty little biatch strategy. LOL
Why would the Chinese buy one of our companies in order to acquire IP when they could just steal it like they have been doing for years. You wouldn't believe the type of data that the Chinese have stolen. Back in 2000 Chinese hackers broke into Los Alamos National Laboratory's computer system and stole a 3ft tall stack of highly classified nuclear weapons documents. So they clearly have no trepidation stealing what they can't invent.
I... but I doubt IBM wants to play around with barby dolls at their level.
They played with Sony... ;-)
does anyone else think it'd be hilarious if bill gates bought amd just because he could?
Microsost has not even been mentioned, WHY. It would make more sense for them to buy out, I am sure Bill has plenty of pocket change);
Windows on ARM (dont care too much about Intel then).
XBOX 360 and what ever is next.
Buyout AMD...pause for thought...
I used to work in the Power Design Division of IBM - what ananke said is wrong. IBM has a lot of manufacturing capability located in East Fishkill NY and Burlington VT. IBM is a leader in process fabrication techniques (as showcased by the number of patents filed each year) and manufactures all the PS3, Wii, Xbox chips in the same plant that currently produces Power7 / mainframe chips. Just wanted to set the record straight.
With that said, I don't think it would be in IBM's interest to pick up a company like AMD. After all, most of the revenues on the balance sheet come from software / services, not hardware.
Cheers!
Bulldozer is about to roll out. If it is good (and it looks good on paper) and if AMD changes strategy + AMD graphics, AMD's near future may be pretty good.
Will people stop saying this. There has been no official word on this alledged "bulldozer".
^^ I love hypothetical success.
Someone will win the lottery next week...if I buy a ticket...you know what that means...
AMD being bought out by either Samsung, Qualcomm or IBM would be a reasonable move, though I don't see Qualcomm being able to make AMD competitive again. Samsung and IBM both have the financial capability to pull it off, as well as the willingness to blow through R&D funds for the sake of innovation. IBM has, what's probably the mother of all R&D departments with the knowledge and experience to challenge Intel on any level. Samsung seems to have similar trends to AMD's though with great products followed by mediocre products and back... With IBM's R&D department backing them....AMD could return to their former greatness and potentially take serious market share from Intel.
Will people stop saying this. There has been no official word on this alledged "bulldozer".
Ummm...where have you been? Processors based on "Bulldozer" are already scheduled for release in the first half of this year....believe Zambezi is the first one coming for the consumer market.
I think Crytek should merge with Futuremark. Then their engine will fulfill its purpose... So what's going on with AMD, lol?
I used to work in the Power Design Division of IBM - what ananke said is wrong. IBM has a lot of manufacturing capability located in East Fishkill NY and Burlington VT. IBM is a leader in process fabrication techniques (as showcased by the number of patents filed each year) and manufactures all the PS3, Wii, Xbox chips in the same plant that currently produces Power7 / mainframe chips. Just wanted to set the record straight.With that said, I don't think it would be in IBM's interest to pick up a company like AMD. After all, most of the revenues on the balance sheet come from software / services, not hardware.Cheers!
Thanks for the info, nice to know! My first desktop PC was an IBM PS/1, and I still have it, so good and fond memories when they were in the hardware business (although all that proprietary stuff you could buy as upgrades/add-ons was expensive). If IBM ever decided to re-enter this market though, it would be a good purchase, as AMD has a modern plaform (CPU+GPU+Chipset).
If IBM or any other company bought AMD, Intel would probably be forced by the government to allow IBM to keep the x86 license, as giving Intel the almost absolute majority of x86 producing rights (VIA is just residual right now) could pose a serious supply risk to be dependent on only one supplier, especially given that x86 is so prevalent everywhere.
Whether 'Bulldozer' desktop processors are a success or not, AMD is only cutting out a slice of Intel's pie. It has always been Intel's pie. Even when AMD were doing very well and seemed to be producing CPU's that were better on all accounts then Intel's processors it never became AMD's pie, it didn't take long for Intel to come back (Core2) and stamp their authority over AMD.
My next concern is that if AMD's R and D department can't compete long term with Intel on the CPU (or APU) front and is struggling to float, how long can the GPU side of things continue to challenge nVidia's crown? Again when AMD comes up with a good line of products that seem to leave nVidia standing it isn't long before nVidia rise to the challenge and again stamp authority over AMD. The gap between AMD and nVidia has been a lot closer over recent years than between AMD and Intel but I can see AMD falling further behind nVidia in the next 5+ years.
Don't call me racist, but I hope a Chinese based company does NOT buy out AMD. The last thin we need is for china to further buy us out.
Don't call me racist, but I hope a Chinese based company does NOT buy out AMD. The last thin we need is for china to further buy us out.
It's about racism, it's just bad global economy. But that has been the way of the world since empires began. It's nice to be on the winning side but those on the losing side always suffer... The so called first world has no actual 'right' to be successful and better off and the tide is now turning...