February 29, 2012 11:43 pm

AMD makes $334m move on SeaMicro

Advanced Micro Devices is buying the chip designer SeaMicro for $334m in a move to grab market share from its close rival Intel in the server market, and fend off an impending challenge from ARM-based products.

AMD, the second largest PC microprocessor maker after Intel, said it would begin offering products combining its Opteron processors and SeaMicro’s technology in the second half of 2012.

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The Silicon Valley company has ceded server share to Intel in recent years and had less than 10 per cent of the market in 2011 – a factor in the decision to replace its chief executive, Dirk Meyer, last year, according to reports.

Analysts also fear it may be squeezed by the introduction of low-power processors in servers, based on chip designs of the UK’s ARM.

But SeaMicro specialises in energy-efficient, high-bandwidth microservers and its technology should match up well against ARM chips. It will be known as the Data Center Solutions Group within AMD - tackling a high-growth area where companies are offering cloud services from remote data centres.

“By acquiring SeaMicro, we are accelerating AMD’s transformation into an agile, disruptive innovator capable of staking a data center leadership position,” said Rory Read, the new chief executive, in a statement.

“SeaMicro is a pioneer in low-power server technology. [This] uniquely positions AMD with a compelling, differentiated position to attack the fastest growing segment of the server market.”

AMD said $281m of the $334m purchase price would be paid in cash, funded from existing reserves.

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