Business, Cloud Computing, Enterprise

AMD Acquires SeaMicro, Starts Selling Intel Microprocessors

AMD just announced that the company signed a definite agreement to acquire SeaMicro for 334 million dollars – $281 million paid in cash and approximately 7.2 million shares (a $53 million value). This is a serious hit to Intel’s cloud strategy and marks AMD’s entrance into the server solution business. According to AMD, the transaction will be funded by AMD’s own cash reserve.

The company currently has $1.9 billion in the bank and with just a fraction of the original "due 2012" $1.88 billion convertible notes remaining (AMD used Intel cash settlement and ATIC investment to pay out majority of that), the company felt comfortable in making such an acquisition.

This is also the first major acquisition since the buyout of ATI Technologies in 2006, for which the company paid 5.9 billion US dollars (while the original buyout price was $5.4 billion, AMD had to buy the FireGL team and IP as well for additional $500 million).

SeaMicro raised a lot of storm by creating a series of ultra-dense, high-efficiency systems called "microservers", which are delivering a lot of dense compute power for everyday tasks – while high performing silicon such as Xeon and Opteron are delivering millions of queries from large databases, SeaMicro filled the need for cloud computing requirements. The company’s focus is all about dynamic web content such as updates for popular software packages such as Mozilla Firefox, social networking, search and video.

The most interesting bit about the acquisition is that this might be the first thing Lisa Su did for the company – she joined only a few weeks ago, and the first touch is the creation of AMD Data Center Server Solutions Business Unit (DCSSBU) – which will be headed by Andrew Feldman, CEO of SeaMicro.

A new product from AMD: A 512 Core Server... with 256 Intel Atom processors. Yes, you've read correctly.
A new product from AMD: A 512 Core Server… with 256 Intel Atom processors. Yes, you’ve read correctly.

For now, the product lineup will remain unchanged, meaning AMD is becoming an Intel Server partner, shipping Intel Xeon and Atom processors. This is nothing uncommon, since NVIDIA is selling Intel Xeon servers too (as a part of Mental Ray and Tesla product stack). Still, funny notion that AMD is now going to be earning a nice profit over Intel product line – and not affect its own revenue given that AMD does not have competing products.

According to AMD, the first products which combine AMD Opteron and current Microserver designs will come online in the second half of this year, with the company planning to put its own low-power Fusion APUs inside the core microservers during the next year. Will this mean we’re going to see Bobcat x86 core inside a Microserver – or its 28nm successor – remains to be seen.

BSN* Take
With this acquisition, we are introducing our "IT Meter: Yes, Geeks Are More Valued than Sports Players" metrics. From today onwards, every acquisition made will be taking special attention to how much the acquiring company paid for the brain value.

In the case of SeaMicro’s acqusition, the calculation is simple: AMD is paying $334M in cash. SeaMicro employes 40 people, bringing a grand total of $8.35M per Employee. Still believe the money lies in sports?