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A new AMD licensing deal could create more x86 rivals for Intel

Agam Shah | April 22, 2016
AMD is licensing its server chip technology to a Chinese joint venture and may later license its PC chip designs.

Intel and AMD have already have an x86 cross-licensing agreement. AMD is confident it is not violating any agreement by doing the joint venture with THATIC.

AMD has been quiet about the size of its share in THATIC, but it's not pouring money in. AMD's only investment will be the intellectual property, and it is expecting overall revenue of $293 million from the deal. THATIC operations effectively will be in the hands of the Chinese Academy of Sciences, a national research institution.

AMD's approach here is much like that taken by ARM, which licenses its chip designs to many companies. ARM processor designs are used in smartphones and tablets from the likes of Apple and Samsung. However licensing chip technology hasn't worked out for companies like Nvidia, which found no takers for its Kepler GPU design.

AMD once was a competitive threat to Intel in servers, but it squandered most of its market share with missteps like the heavily criticized Bulldozer architecture. AMD also bought microserver company SeaMicro for $334 million in 2012 but exited that market last year.

The licensing deal and joint venture also give AMD a direct entry into the booming China market. Companies like Baidu, Tencent and Alibaba are building mega data centers, much like Google and Facebook in the U.S., and are committing a lot of computing resources in areas like machine learning.

AMD's entry will also intensify server competition in China. IBM is warming up to Chinese companies with its Power architecture and Qualcomm is making a 24-core ARM server chip for the market.

The joint venture will also give the Chinese government access to x86 designs, which it has coveted for a long time, McGregor said. China wants to foster the development of homegrown chips, and local companies already have access to architectures like Power, ARM and MIPS.

But there's still work for AMD to do in building a relationship with the Chinese government. Intel has a head start as it has played politically nice and invested heavily in China.

 

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