In recent years one of AMD's top priorities was its datacenter business powered by its highly competitive EPYC processors. To further boost the business , AMD acquired Xilinx, a leading developer of field programmable arrays (FPGAs). In another move to boost the company's datacenter business AMD announced [PDF] it had reached an agreement to buy Pensando, a designer of fully programmable processors in a deal valued at $1.9 billion.
So what is a fully programmable processor and how different it is from an FPGA?
The answer is in proprietary software and hardware, it is both complex and easy. With an FPGA, you have a lot of flexibility for managing security networking or data processing, but for specific special-purpose tasks you need additional hardware. This is where Arm cores and fixed-function hardware comes in Xilinx FPGAs (and AMD now has Xilinx). With Pensando, AMD gets another type of IP: programmable processors and applicable software that can operate it.
In fact, software is perhaps the key reason for the acquisition. AMD says that the solutions platform that it gets includes a "programmable packet engine and complete software stack that accelerates networking, security, storage and other services for cloud, enterprise and edge applications."
AMD says that with the addition of Pensando, the company will have the capability to innovate at the "chip, software and platform level and deliver optimized solutions with unmatched performance and value for our cloud and enterprise customers."
"The combination of our CPUs, GPUs, FPGAs, and adaptive computing engines with Pensando's packet processor and software technologies will enable AMD to offer a broad portfolio of compute engines that have been optimized for different workloads," a statement by AMD says. "We believe this is going to be a critical requirement to deliver the performance, power efficiency and capabilities required to power the next generation of accelerated data centers at scale."
While we can only speculate about the chip level innovation that AMD suggests, there is a clear strategic move on AMD's side:
"To build a leading-edge data center with the best performance, security, flexibility and lowest total cost of ownership requires a wide range of compute engines," said Dr Lisa Su, chief executive of AMD. "All major cloud and OEM customers have adopted EPYC processors to power their data center offerings. Today, with our acquisition of Pensando, we add a leading distributed services platform to our high-performance CPU, GPU, FPGA, and adaptive SoC portfolio. The Pensando team brings world-class expertise and a proven track record of innovation at the chip, software and platform level which expands our ability to offer leadership solutions for our cloud, enterprise and edge customers."
There are other reasons why AMD is particularly interested in Pensado, as it is interested in any other enterprise-related companies: margins, quotes, and allocations at foundries.
Selling high-end CPUs for servers and desktops enables AMD to post a ~50% gross margin, something that is good enough to compare to other fabless companies, but not good enough to compare to firms like Nvidia. Datecenter products bring in higher margins and higher prices, which is why AMD wants Pensando.