Ailing AMD open to offers as chip maker calls in JP Morgan

By Graeme Burton
14 Nov 2012 View Comments

Just two weeks after revealing its plans for adopting ARM for low-power server technology, chip designer AMD has put itself up for sale – with a slew of industry companies, including Intel, Google, Samsung and Facebook – mentioned as potential suitors.

According to reports, the company has hired investment bank JP Morgan to "explore options", which includes a sale to a rival company.

Further reading

However, according to inside sources quoted by newswire Reuters, an outright sale of the company is not the top choice on the list.

The company has already floated off its foundry business, Globalfoundries, and further options include a sale of its valuable patent portfolio. An acquisition by its rival Intel would probably be out of the question on anti-trust grounds, but Intel may be able to buy key patents. 

Likewise, ARM is part of a consortium of companies that have committed to purchasing patents and pooling them in a bid to neutralise the stifling potential effects of "patent wars" on the development of the industry. 

From desktops to tablets

AMD has struggled as the growth in the computer market has shifted from PCs and laptop computers, where it competes strongly with Intel with a market share of around 20 per cent, to mobile computers – especially smartphones and tablet computers, which have been based on ARM designs produced by a plethora of licensees, rather than power-hungry x86-compatible parts more commonly used in PCs. 

"AMD's board and management believe that the strategy the company is currently pursuing to drive long-term growth by leveraging AMD's highly-differentiated technology assets is the right approach to enhance shareholder value," said the company in statement to Reuters.

The names Microsoft, Google, Samsung, Intel and Facebook have all been tossed about on Wall Street as potential buyers – either of its patents, microprocessor business or of its graphics card division, which comprises the ATi Technologies graphics card business it acquired in 2006.

AMD would probably be too big a company for ARM to absorb – even if it did want to dilute its focus on mobile and low-power chip designs – but it may be interested in acquiring patents as part of a consortium, as it did recently with its purchase of MIPS Technology's patent portfolio with rival Imagination Technologies.

The radical move of bringing in JP Morgan has been stimulated by a rapid decline in the company's cash-in-hand, down by $279m in the third quarter to $1.48bn.

New CEO Rory Read has promised to re-focus the company on growth areas, but production of 64-bit ARM technology that AMD recently licensed will not start until 2014 at the earliest.

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