AMD to License Chip Technology to China Chip Venture
April 21 2016 - 4:44PM
Dow Jones News
By Don Clark
Advanced Micro Devices Inc. has reached a deal to allow a new
joint venture in China to produce chips there using proprietary
technology long considered the crown jewel of AMD and its rival
Intel Corp.
The move, which could spur opposition from Intel, underscores
AMD's pressing search for new revenue following its long-running
struggle in the microprocessor market. It also reflects China's
high-profile quest to become less dependent on foreign technology,
using investments and acquisitions that at times have prompted U.S.
government scrutiny.
Under the deal, AMD said it had licensed x86 chip technology to
a new venture it is forming with Tianjin Haiguang Advanced
Technology Investment Co., which will use the technology to develop
chips for server systems to be sold only in China. In exchange, AMD
said it expects to receive $293 million in licensing fees plus
royalties on sales of any chips developed by the venture.
Chinese Web services have lately been among the world's largest
server buyers, prompting competing joint ventures by rivals of
Intel to help break the Silicon Valley giant's near-total hold on
server chips. In some cases, including the AMD deal, the ventures
allow Chinese companies to develop chips with homegrown security
circuitry to ease fears that foreign spies will penetrate computers
in China.
"This is very significant," said Jim McGregor, an analyst at
Tirias Research, of the AMD venture. "China is the battleground for
the next generation of servers."
AMD, under Chief Executive Lisa Su, previously had signaled it
planned to find new ways to make money from its intellectual
property. "Our new licensing agreement is a great example of
leveraging our strong IP portfolio to accelerate the adoption of
our technologies more broadly," she said in prepared remarks.
AMD, with its headquarters in Sunnyvale, Calif., announced the
China deal Thursday with its first-quarter financial results.
Write to Don Clark at don.clark@wsj.com
(END) Dow Jones Newswires
April 21, 2016 16:29 ET (20:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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