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AMD’s Real China Play is Strategic Investment

AMD’s (NASDAQ: AMD) future lies within China for many reasons, but not just as a growing market for its products. However, it is not the country that a company keen to outright takeover AMD hails from but rather it will be the source of strategic investments into AMD throughout 2015-2016.

VR World has learned China’s Loongson Technology, a microprocessor manufacturer that’s a joint venture between Beijing-based chip designer BLX IC Design Corp, the Chinese Academy of Sciences and the Institute of Computing Technology, is set to make key investments into AMD’s technologies and product lines. Loongson is best known for its Godson line of chips that use the MIPS architecture.

Earlier reports indicated that China’s BLX intended to initiate an outright takeover of AMD, but this course of action is unlikely due legal concerns from Intel and regulatory issues that might arise from US authorities.

These investments are set to begin immediately. Loongson’s targeted investments will be funded by a $19 billion war chest (120 billion RMB) that the company has set aside for such ventures.

Loongson and AMD have worked together before in the past. AMD’s HyperTransport and PCI South as well as North bridges were in previous Godson silicon, so for Loongson AMD is not entirely foreign territory. The two opened an R&D center in December 2003 in order to develop what the two hoped would be something to counter the goliath of Intel.

Investing in AMD’s various technologies and product lines would be a much easier transaction for Loongson. It would not have to deal with the regulatory burden the US government might impose, nor would it need to negotiate an x86 license from Intel (NASDAQ: INTC). It is not yet clear what the end result of such investments might look like, but it could be that Loongson markets future Godson systems with more AMD inside — such as GCN GPU architecture.

Key AMD staff were in Beijing in late January and early February likely in meetings related to this deal.

There’s plenty that needs to happen to make this official, but such a deal is much more likely than an outright takeover. More details will be posted as they are available. A response from AMD will be posted when available.