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.

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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