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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.

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    Any investment in AMD would require a quid-pro-quo. Stock? A seat on the board? Technology? Radeon License? Product development?

    One of the items specificly addressed by the FTC during the Settlement Approval was the right of AMD to engage in joint ventures free from the threat of a lawsuit by Intel.

    Microsoft and Sony both developed customised x86 console silicon with AMD. This was effectively a joint venture. The 8 core Jaguar silicon is also proprietary and not available in the channel.

    Likely Loongson is one of the custom silicon customers that AMD announced earlier. The relationship could be long term with the cost of the custom product development to be completely carried by Loongson.

    The “investment” would be a payment for the R&D necessary to bring the Loongson product to market. This could be both x86 and ARM silicon.

  • Al Jazera Kara Garafi

    I didn t know that AMD still exist.

  • anubis44

    AMD’s next generation x86 and ARM processors will be very competitive with Intel’s x86 and other ARM manufacturer’s chips respectively, as AMD has probably the world’s pre-eminent processor engineer, Jim Keller, heading up their CPU division since 2013. It takes a couple of years to design, test and produce a new CPU design, so Mr. Keller’s new chip will be released near the end of this year.

    • OnlyMe999

      next year, not this year.