Analysis, Rumors

A Takeover of AMD by China’s BLX is Unlikely

AMD Restructuring AMD Restructuring

As AMD (NASDAQ: AMD) continues its to struggle with consistent profitability, rumors are consistently appearing about possible contenders to buy the company out.

The latest rumor comes from China’s My Drivers, which outlines possibility of an AMD takeover by China state-owned semiconductor firm BLX. BLX is owned by China’s Institute of Computing Technology, Academy of Sciences and Jiangsu Zhongyi Group and currently designs (it’s a fabless firm) a MIPS-based processor targeted to embedded devices.

While AMD’s GPU assets would be easily up for grabs, its x86 license is another deal. Part of any x86 license is a strict condition that it is non-transferable. This means that BLX would have to negotiate with Intel (NASDAQ: INTC) and come to an agreement that satisfies both parties. The possibility of Intel transferring the x86 license shouldn’t be ruled out entirely; Intel has come to two notable deals in China two give Rockchip and Tsinghua Unigroup access to x86 for mobile development. Considering Intel’s willingness to work with Chinese firms — its $100 million investment in Shenzhen is another example of this — it would be foolish to entirely discount a licensing play.

However such a takeover deal is unlikely to occur simply because AMD isn’t at that make or break stage quite yet. Lisa Su — AMD’s freshly minted CEO — hasn’t had time to prove herself. It would be odd, as Bernstein analyst Stacy A. Rasgon blogged, for Su to decide so early in her position to sell the company as her first act. Plus, BLX would have to make the case to shareholders — which includes Abu Dhabi’s Mubadala Development Company — that there’s more value in selling the company than continuing to push for a recovery and turnaround. AMD has not had to recently deal with aggressive activist shareholders, so there may be a desire amongst its large shareholders to see if a better return can be made pushing for a turnaround.

AMD’s stocks rose by 5% during the Monday trading day as some investors were cautiously optimistic that this rumor might have legs.

  • Busybee

    Concerning Intel and Rockchip partnership, check the video below. Those ARM SoCs have the label Intel on them….

    https://www.youtube.com/watch?v=JYBJYT656C0

  • CPUsAreHistory

    It’s not the x86 license what is valuable. It is the new AMD fused HSA/hUMA CPU/GPU architecture that is the key. All that architecture is owned by AMD and Intel, etc. are years from having that advance architecture that solves the problems that old x86 architectures have.

    Sure AMD does not have money to finish in time the high-bandwitdh connectivity needed to bring the maximum performance from that architecture but that is just time.

    AMD is a processor design and architecture cash-cow to whatever company decides to but it. The first HSA/hUMA fully compliant chip is becoming available this year.

    AMD is the only well rounded company who owns and sells both 64-bit high end CPUs/GPUs/APUs and supports 64-bit ARM and 64-bit x86.

    AMD relationship with Intel failed because Intel is not a good partner and anybody who dealt with Intel projects has failed because of Intel dark marketing practices. i.e. HP Itanium, SGI, etc. So it is great to see AMD going to ARM, which is a dagger to Intel.

    If Microsoft buys AMD, then it will be like Apple who makes its own high end hardware.

    Qualcom will become the new Intel if they buy AMD since they can put the money to build high-end high-performance HSA/hUMA AMD APUs. They will own ARM and x86 high-end processors.

    NVIDIA can buy AMD and stop being the shadow of Intel and Intel will not continue depend on NVIDIA/AMD for any high-end GPUs or high-end workstations.

    Texas Instruments will become a fully recognized CPU/GPU/APU company if they buy AMD and a major competitor in all areas.

    In my view, AMD is a cash-cow opportunity for any processor company regardless of the x86 instruction set. If Intel does not renew the x86 license, then they cannot use AMDs 64-bit x86 extensions, which will cripple all Intel processors and Intel will sink.

    AMD just needs some good money infuse and they will have the best high-end and economical processor architecture and chips. They just need to get their inter-connectivity bandwidth implemented which is just a matter of time.

    • Busybee

      Read the cross license agreement: http://www.sec.gov/Archives/edgar/data/2488/000119312509236705/dex102.htm Look under Section 3 “Grant of Rights”. There’s a big reason why its called “cross license” otherwise you would not be seeing SSE, SSE2 and AVX on AMD processors. Plus Intel gets to keep that 64-bit x64. And if that licensing becomes void (look under Section 5.2 “Termination; Effects of Termination”), AMD can kiss goodbye x86, SSE, SSE2, AVX, etc.

      • CPUsAreHistory

        The Chinese will care about the AMD HSA/hUMA APU architecture and the 64-bit AMD’s CPU technology and ARM & server technology, which is where AMD’s value is and AMD owns. This is without counting all of AMD’s high end graphics/gaming technology that powers all the gaming industry right now.

        They would not care about any x86, SSE, SSE2 or AVX technolgy.

        AMD already had designed mother boards that run ARM or x86 chips and software/compilers that most like will be able to compile for both instruction sets. Easy change to support the Chinese chips for applications, servers, gaming, etc.

        I think Intel can stay with AMD’s 64-bit extensions and AMD, or any other company building their own processors, will care less about it. For the Chinese market, it will be a win-win situation because Intel will not be able to compete with AMD’s new architecture and lower cost implementation bases.