The last decade has not been kind to AMD. It used to be a company that was readily comparable to Intel in almost every way, having much the same infrastructure (including chip fabs) whilst producing products that were readily comparable. Today however they’re really only competitive in the low end space, surviving mostly on revenues from the sales of both of the current generation of games consoles. Now with their market cap hovering at the $1.5 billion mark rumours are beginning to swirl about a potential takeover bid, something numerous companies could do at such a cheap price. The latest rumours point towards Microsoft and, in my humble opinion, an acquisition from them would be a mixed bag for both involved.
The rumour surfaced from an article on Fudzilla citing “industry sources” on the matter, so there’s potential that this will amount to nothing more than just a rumour. Still talks of an AMD acquisition by another company have been swirling for some time now however so the idea isn’t exactly new. Indeed AMD’s steadily declining stock price, one that has failed to recover ever since its peak shortly after it spun off Global Foundries, has made this a possibility for some time now. A buyer hasn’t been forthcoming however but let’s entertain the idea that Microsoft is interested to see where it leads us.
As Microsoft begins to expand itself further into the devices market there’s some of potential in owning the chip design process. They’re already using an AMD chip for the current generation console and, with total control over the chip design process, there’s every chance that they’d use one for a future device. There’s similar potential for the Surface however AMD has never been the greatest player in the low power space, so there’d likely need to be some innovation on their part to make that happen. Additionally there’s no real solid offering from AMD in the mobile space, ruling out their use in the Lumia line of devices. Based just on chips alone I don’t think Microsoft would go for it, especially with the x86 licensing deal that the previous article I linked to mentions.
Always of interest to any party though will be AMD’s warchest of patents, some 10,000 of them. Whilst the revenue from said patents isn’t substantial (at least I can’t find any solid figures on it, which means it isn’t much) they always have value when the lawsuits start coming down. For a company that has billions sitting in reserve those patents might well be worth AMD’s market cap, even with a hefty premium on top of it. If that’s the only value that an acquisition will offer however I can’t imagine AMD, as a company, sticking around for long afterwards unfortunately.
Of course neither company has commented on the rumour and, as of yet, there isn’t any other sources confirming this rumour. Considering the rather murky value proposition that such an acquisition offers both companies I honestly have trouble believing it myself. Still the idea of AMD getting taken over seems to come up more often than it used to so I wouldn’t put it past them courting offers from anyone and everyone that will hear them. Suffice to say AMD has been in need of a saviour for some time now, it might just not end up being Microsoft at this point.