AMD is a company with a shaky future to be sure, but since the end of 2011 they have started to narrow in on a few areas that they can continue to make money on while slowly building their portfolio of technologies. By adding in a few key technologies AMD can try to fix some of the issues they have in their existing products, like server and desktop CPUs, in an effort to compete with Intel again. This is something they have to do (even if Rory Reed does not want to) as that is what the market expects and consumers will always compare the two companies in terms of performance and price. The server market in particular should be of interest to AMD especially with the big movement to the cloud. If AMD can get low-power, high efficiency CPUs into the channel they can build a nice revenue stream as the margins are much higher than consumer products.  Many companies would also prefer to have a low power x86 CPU over an ARM based CPU simply for compatibility and scalability. We expect to see AMD renew their partnership with Citrix to optimize their virtualization platform to work with AMD CPUs in order to capitalize on this market moving forward.

Rory Reed’s original idea of moving the company into a much more mobile oriented direction is not panning out well for AMD as there are simply too many players in this arena for AMD to grab a stable foothold right now. The market is cluttered with ARM SoCs which are less expensive than any of the x86 products that are being pushed and in many cases do not require a hefty licensing fee from Microsoft.  Although AMD has invested in Android for x86 it is not ready yet so it will not impact the market in any noticeable way. AMD also missed out on the push for Windows 8 and will most likely not be represented when that OS launched on October 26th. This is unfortunate for AMD considering their Trinity APUs would have done well here with the much more graphically oriented UI formerly known as Metro. Still AMD might also have dodged a bullet as there is some doubt about the future of Windows 8 and its acceptance in the market.

Still we know that AMD is very interested in ARM and their technology. They have recently licensed the ARM Cortex 9 CPU specifically for its security technology and are looking to integrate it into their own core designs as an extra security layer. It is something of a down and dirty approach to security, but if the plan works out who is to complain. AMD has also just borrowed $300 Million which they can use to pay off some existing debt or for more acquisitions. This shows that they are not considering themselves as out of the party at all.

So where do the rumors of acquisition come from? Well they might come from a misreading of signs. If you remember there was talk that AMD would be making an ARM based SoC after they entered into talks with ARM. In reality they were looking for a partnership so they could improve their own products.  The same thing happened with there was rumblings that AMD was entering into an R&D partnership with many ARM Manufacturers. Again AMD was not looking to be purchased, but to create a way to lower their overall R&D budget.

So where is the rumor that Samsung or Qualcomm will buy AMD coming from? Our guess is that with the purchase of SeaMicro in its entirety Samsung (a long time AMD partner) and Qualcomm are looking to invest in AMD for the purpose of developing high-performance ARM based servers. Both companies have been pining for these for the last few years and could see cash poor AMD as an excellent opportunity. If they dump money into AMD to help them develop a proper ARM based HPC product that could benefit all three companies.

If this is the direction that they are going we would look for AMD to acquire someone like Applied Micro or Calxeda. Our money would be on Applied Micro as the more logical choice in the matter and it would give them a nice starting point to kick of an Arm based server project.

With these happenings it is highly unlikely that AMD is in the position to be bought by Samsung or Qualcomm and it also does not look like AMD wants to be bought by anyone. They do have some tricks up their sleeve which we will hear about over the next few months including a likely push of their new FirePro Processors down into the consumer space once they get them off the ground for the workstation crowd.

Discuss this in our Forum