Acquisition rumors heat up
Recently, rumors about AMD being acquired by Qualcomm or Samsung have been going on. However, these rumors are not new, and they often appear, usually when AMD's share price is at a low point. Qualcomm and Samsung have been repeatedly mentioned as potential acquirers, but such rumors actually have almost no credibility and simply can't stand scrutiny.
To be honest, from a technical point of view, it is almost meaningless for Samsung and Qualcomm to acquire AMD at this stage, especially for computing devices with rapid sales growth such as smartphones and tablets, which can be authorized through the core/infrastructure of ARM. From a financial or commercial point of view, this acquisition is even less feasible.
Before the smartphone revolution, X86 compatibility has been a hot topic in the computing equipment industry. Now almost all platforms (except PC) can easily run on MIPS, ARM and X86 architectures. To produce tablet computer chips, a company can develop its own kernel and system-on-a-chip (SoC) only by obtaining the authorization of ARM Instruction Group, and companies such as Qualcomm take this route.
Therefore, after AMD got into trouble, Samsung and other companies took measures to poach a large number of talents from AMD to help them design the next generation processor core compatible with ARM architecture. In particular, if you look at the profile of Jeff Rupley, the chief architect of AMD Jaguar Project, on LinkedIn, a professional social networking site, you will understand that he is actually a member of Samsung Austin design team.
The patent value is not high.
Paul otellini, CEO of Intel, pointed out at a recent conference that Samsung basically recruited AMD's CPU team in Austin to develop micro-server chips for it. If any bigger companies are eyeing AMD's talents, they can easily dig corners, because these companies can provide better benefits and salaries than AMD.
As mentioned earlier, although the intellectual property based on X86 architecture may have some value, it is far from being hard to give up. For mobile devices such as smart phones and tablet computers, ARM or MIPS architecture can be completely adopted. In the PC field, competing with Intel is obviously not a good strategy.
AMD has first-class graphics patents, which can be used for PC and HPC (High Performance Computing Equipment), but customers' needs in this respect can be realized by licensing patents to ARM or Imagination, or by digging corresponding engineers from AMD for independent research and development.
Frankly speaking, according to the current situation of the processor industry, AMD's intellectual property rights are not worth a few dollars. If it was before the iPhone appeared, or when the mobile industry embraced X86 architecture in an all-round way, AMD's intellectual property rights might still be valuable, and it would not be reduced to the point of being acquired by competitors. However, given that manufacturers can obtain patent authorization from ARM, what value can the acquisition of AMD bring to any giant in this industry? The answer is of little value.
Bear huge debts
Another problem faced by the acquisition of AMD is that in addition to stepping into an industry where free cash flow is difficult to be positive, the acquirer also needs to bear huge debts of more than 2 billion US dollars. Therefore, even if the market value of AMD is relatively low today, only 654.38 USD+900 million USD, the acquirer will still bear the net debt of 654.38 USD+400 million USD, which does not include the tax levied on the return of overseas assets of AMD.
It is true that companies such as Qualcomm, Samsung or Intel have sufficient cash reserves and can easily win AMD, but the problem is that from a financial point of view, this transaction is not very beneficial to them. If the intellectual property value of AMD is high, there may be companies interested in it. The crux lies in their low value. What's more, the debt of more than one billion dollars further reduces AMD's attractiveness.
AMD's acquisition eventually became a legend.
conclusion
Don't listen to AMD saying that it is an acquisition target. AMD will face two outcomes in the future. One is to put forward a new development strategy and tide over the difficulties through our own efforts. One is the ultimate bankruptcy, and the patent is sold cheaply to pay off debts. In my opinion, AMD can still continue to exist through restructuring, especially gradually get rid of the Intel model and embark on a unique development path.