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Microsoft might be interested in buying AMD, according to source

2K views 49 replies 17 participants last post by  Radix865 
#1 ·


Here the article:

In a bid to revive its chip design operations, Microsoft Corp. may acquire Advanced Micro Devices, according to a source familiar with the matter. The software giant approached AMD several months ago, the source indicated. The result of the talks is unclear.

Microsoft Corp. has been selling game consoles for over ten years now and back in 2006 the firm even formed a division to design chips for its products, primarily game consoles. While this internal group has clearly developed some chips for Microsoft’s hardware, the company used chips designed by Advanced Micro Devices and Nvidia Corp. for its Xbox One consoles and Zune players, respectively. As it appears, Microsoft’s own chip design team cannot really develop competitive solutions for the company’s devices and in order to make its chip operations viable.


AMD headquarters. Image by Wikipedia

The details about negotiations are unclear, just like Microsoft’s exact proposal to AMD. However, since Microsoft has $95.3 billion in cash, whereas AMD’s market capitalization right now is $1.81 billion, the software giant may buy AMD relatively easily. In fact, current value of AMD is three times lower than the company paid for ATI Technologies in 2006.

Analysts estimate that Microsoft pays around $100 for every Xbox One system-on-chip to AMD. Life-to-date sales of Xbox One are around are around 12.6 million units, which means that Microsoft has already paid AMD around $1.26 billion for Xbox One chips. The acquisition of AMD could save it around a billion per year on Xbox One chips alone. It the company develops appropriate chips for smartphones and tablets, Microsoft’s savings could be even higher.


Microsoft Xbox One SoC. Image by iFixit

It is necessary to note that Microsoft does not really need AMD. The software giant needs system-on-chips to power its Xbox game consoles, Lumia smartphones, Surface tablets and possibly other hardware devices. It does not really need server processors or high-end graphics cards. However, AMD’s management will unlikely sell a part of AMD to Microsoft since its accelerated processing units (what Microsoft needs) are based on technologies developed for server microprocessors and high-end graphics cards.


AMD Lone Star campus. Image by Bizjournals

The battle for video game console space is very strong. If Microsoft bought AMD, then Sony would be faced with a bad set of choices: put money in Microsoft’s pocket every time it sells a PlayStation, or try to create an entirely new platform by using technologies from Intel, Nvidia, ARM or Imagination Technologies.

Since game consoles is an important business for Microsoft, the company naturally wants to make sure that its technology provider does not go bankrupt or is acquired by a competitor. For example, if Samsung takes over AMD and builds-in its APUs into its TVs, it will automatically become a major player in the market of video games.

AMD and Microsoft did not comment on the news-Story.

Source:
http://www.kitguru.net/components/a...erested-to-buy-advanced-micro-devices-source/
 
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#2 ·
Somehow I doubt so. MS already has enough on its plate.

Acquiring AMD could compromise its position as an independant provider of chips for MS' rivals and result in stagnation. All MS would really need to do here is acquire a controlling stake and invest in particular. We're focusing on how much MS could save by acquiring AMD, but the existing revenue streams from PS4 would already make a purchase profitable from day 1, given how depressed its stock is.
 
#3 ·
Microsoft is in need of hardware and having dedicated hardware in house to push there divisions could be beneficial to them most specially in the smartphone and tablets sector. Surface could potencially take advantage of such a move and not necessary the console market. Nadella had a statement recently about the focus of the company so i wonder if his statement may influence the possible purchase or not. AMD has a great APU and with more research it could be very good for mobile gaming in general. At the end it will benefit the Xbox gaming division as well but i don't see the competition going for AMD in the future for obvious reasons. If i were Sony or Nintendo i wouldn't that's for sure.
 
#4 ·
Man that's evil, make money every time your competitor sells their product. Plus influence it's price and that with just an acquisition. I can see why Microsoft finds it tempting.
 
#5 ·
Microsoft arguably needs ARM chip foundries for IoT. Unless their plans include expanding AMD's lineup to include ARM licencing and manufacturing (Mediatek could use a boost in GPUs of the kind Nvidia's Tegras grant Shields), I just don't see an acquisition a viable prospect to look forward to.

Just look at how other acquisitions stagnated. Failing to keep AMD competitive would mean a decade or longer's monopoly for Intel, and near-impossibly high barriers to entry for new contenders or even existing ones like Samsung.
 
#6 · (Edited)
It's indeed an evil deal for so many reasons. First of all Microsoft is in serious need of hardware that can potentially help push there goals not to mention they simply have the money to go for it anytime. Then we have the XB1 where MS have to pay about $100 for each unit to AMD and for the record Sony and Nintendo probably pay less or similar amount of money. With that in mind MS could save $100 on the XB1 allowing them to make it cheaper and since Sony and Nintendo would have to pay them they could even recover the money back over the next years. The move also puts the competition in a bad situacion as they will have to go to the competition such as Intel and NVIDIA potencially increasing the costs of there upcoming devices. MS having AMD technology in house can give them an insane advantage.

The move is a win to win situacion for Microsoft and they have not much to lose if at all but the time will tell. The area i see improving by such a deal is the mobile space as they could improve the surface even further to allow better gaming.
 
#9 ·
What MS needs is not chipmakers but integrators. Times have changed, shopping around is the norm now, instead of doing everything inhouse. Just look at Google's Chromebase and generally All-In-Ones. MS has the same concept integrated with their ecosystem like Apple like 10 years earlier and did absolutely nothing with it.

Clearly there's still a problem at MS but it's not lacking ownership of shipmakers and integrators. Inventing concepts is good and all, but a complete waste if not taken to the market and priced to sell.
 
#10 · (Edited)
What really scares me about this news is that Microsoft recently payed 2+ billion for Minecraft and has 93+ billions in cash so paying less for AMD is just a kid game for them. Thinking in the benefits they get from such a deal i believe they won't hesitate as it makes sense from a business stand point. That's going to be a shady move... those seem to be the norm this days it seems.

If this happen we will have the same situation as Android where google may be popular as hell but MS cash tons of money from patents to easily fund there Windows Phone plattform. In other words the competition will pay them and continue the circle.



The difference is that Microsoft now has the right people at the top that do no hesitate to execute great ideas. In the past they had the successful ideas of today but they simply had the wrong people at the top sending those great ideas to the bin but that's no longer the case.
 
#11 · (Edited)
After doing some more research on the matter i really hope this is just a rumor and there is a way out of this because this is going to turn ugly. First of all it seems to be a very bad situation for all parties. AMD is the only competitor Intel and NVIDIA has in the PC sector and it's only competitor is in bad shape. As of now we have 3 possible ways and those are:

1. Qualcomm
2. Samsung
3. Microsoft

If Microsoft doesn't buy AMD then Qualcomm or Samsung are going to get it. Qualcomm and Samsung care about mobile mostly if not only meaning all the research is going to shift into that direction leaving Intel and NVIDIA as the only option in the PC market. If both have a monopoly we know how bad for us that's going to turn as monopoly is rarely good. If Microsoft buy AMD i can see the bashes all over the internet for doing a shady move.

I also agree that is a shady move as it hurts Sony and Nintendo but is that truth? the move may probably not affect them at all right now and if they do i bet people are gonna get loud and for a reason. From a business standpoint MS is simply doing business. Now...what's the better option then? if AMD stays alive and continue giving Intel and NVIDIA a good competition i personally don't care if is Microsoft behind it as long as the PC market stays healthy and has enough options for us customers to choose.

The way i see it we either hurt the console market a little or we have a monopoly in the PC market. I personally would hate the later and there is also a big chance that the console market is not affected that much or at all at least not this generation. I guess only time will tell.
 
#13 ·
If Microsoft doesn't buy AMD then Qualcomm or Samsung are going to get it.
My money's on Mediatek, whose graphic stack was consistently by far its greatest weakness. Another reason they could be interested is expanding to Intel-compatible mobile chips.

Qualcomm doesnt need AMD at all, and the only reason Samsung could want AMD is to expand their foundries for PC chips instead of keeping them limited to ARM.
 
#26 ·
at least it's unfeasible for Yahoo to buy them. That'd guarantee an instant drop of relevancy for AMD.
 
#19 ·
Microsoft payed 2.5 billions for Minecraft and it's being said that they have 93+ billions in cash just like that. Buying AMD for 1.8 billions for example would be like you buying a candy. The whole story is pretty crazy but from a business standpoint it does make sense since they need in-house hardware to push there mobile sector. Business people and there shady stuff as usual...
 
#28 ·
Here we go again............

AMD shares spike due to rumours that Microsoft will buy it

Just ahead of the weekend the rumours concerning Microsoft's interest in buying AMD were rekindled. Fudzilla publishedan exclusive, based up information from its industry sources, claiming "Microsoft is seriously talking to AMD about buying the chipmaker".



I'm not sure at exactly what time Fudzilla published its story, but as you can see from the share price graph, above, AMD's share price started to climb at a rapid pace at about 2.30pm US Eastern time. It climbed about 15 per cent in 20 minutes, and then it settled down and stabilised to close just over 9 per cent up on the day. At the time of writing the US markets are closed with AMD shares worth $2.01. AMD's 52 week low was $1.61, at the end of July, and its high was $4.11 – that was exactly a year ago.

Apparently Microsoft and AMD have been "in talks for a while," but the sources weren't clear about when/if anything will happen or will be announced. Fudzilla ponders whether Microsoft could benefit from controlling the development of future Xbox chips and make its own GPUs to get the best from DirectX 12. Then, when Zen-based CPUs and APUs appear, these processors could become the natural choice of processor for the Surface range.



Later on in the Fudzilla report, the rumour smoke clouds turn into, an even less distinct, haze. The site says that AMD's recent formation of the Radeon Technology Group "could mean that the company might be acquired in pieces". Then we are told that "our well informed industry sources suggest that Intel is interested in the acquisition of AMD".

AMD's market value, according to its current share price and number of shares in issue, is $1.57 billion.

Source:
http://hexus.net/business/news/corporate/86423-amd-shares-spike-due-rumours-microsoft-will-buy/
 
#29 ·
Rising shares are really a defensive move, not the opposite.

It's often a strategy to artificially force a higher sale price if negotiators are weak, or make it too expensive to acquire for select potential buyers (filters out cheapskates while showing more serious potential buyers that rising shares can make them recoup their investment quicker).
 
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