AMD stock soars on news of x86 licensing agreement with Chinese consortium

Shawn Knight

TechSpot Staff
Staff member

AMD’s share value is surging on news that it has licensed its x86 chip technology to a consortium of public and private Chinese companies.

The consortium, known as Tianjin Haiguang Advanced Technology Investment Co. (THATIC), will use the licensed technology to develop custom server chips that’ll be sold exclusively in China. The agreement is expected to generate $293 million in licensing fees for the struggling chipmaker in addition to royalties on the sale of chips created by THATIC.

As you can imagine, the deal probably won’t be well-received by rival Intel.

According to Mercury Research, Intel chips powered 99.4 percent of all corporate data centers in 2015. AMD, which once claimed nearly a third of the market, held a miniscule 0.6 percent share last year.

The Wall Street Journal points out that AMD and Intel signed a cross-licensing agreement in 2009 that stated neither party could transfer rights to licensed technology to other companies. Intel will almost certainly bring this up although an AMD spokesperson said the new deal doesn’t violate the cross-licensing pact due to the way the joint venture’s ownership is structured.

In addition to the new revenue stream, the deal gets AMD’s foot into the proverbial door of the booming Chinese market and further expands its install base. What’s more, the deal isn’t costing AMD anything as it’s simply using existing IP to generate revenue.

Share value in AMD stock is up more than 39 percent as of writing.

Image courtesy Bizjournals

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Kibaruk

TechSpot Paladin
Share value in AMD stock is up more than 39 percent as of writing.
which is about $1/share.

Poor AMD. :(
Hi MikeSnow, welcome to economics 101. If you have a billion dollar company and it goes 39% up, you have a billion and 390 million company now, whether the stocks are at $1 or $1.000.000. If you invested in this company and saw a 39% increase in your investment, you just got about a 3000% more than what would probably the bank gave you for that money for a determined period of time.
 
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MilwaukeeMike

TS Evangelist
Hi MikeSnow, welcome to economics 101. If you have a billion dollar company and it goes 39% up, you have a billion and 390 million company now, whether the stocks are at $1 or $1.000.000. If you invested in this company and saw a 39% increase in your investment, you just got about a 3000% more than what would probably the bank gave you for that money for a determined period of time.
THanks, CondescendingKibaruk. actually percents and absolute numbers aren't economics 101, they're regular ol' 5th grade math. And with that HUGE increase of 39% today AMD is now worth 3.17 BILLION dollars. Which puts them at about 1/50th the size of their 150bln dollar competitor, Intel. How many other industries are there with two major players where one of them is 50 times bigger than the other. Maybe the video card market where Nvidia mops the floor with... AMD! So I'll say it again... Poor AMD. :(

(I really do feel bad for them. I've always bought their chips for my PCs, but this sorta feels like the blind squirrel finally finding a nut.)
 

Camikazi

TS Evangelist
Oh, Intel is not going to like this and will fight it, they protect their x86 like a mother bear protects her cubs.
 

Kibaruk

TechSpot Paladin
I'm still unsure why AMD should feel bad... but whatever, still AMD is worth like a trizillion more than you, if we are comparing aples to oranges... why not =P

When you apply maths into fields, they become something else. Good you know, maybe your next posts won't make you sound stupid like that first one.
 
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dividebyzero

trainee n00b
Oh, Intel is not going to like this and will fight it, they protect their x86 like a mother bear protects her cubs.
Well, if AMD are handing out third-party licensing without clearing the legal ramifications with Intel before they sign contracts, the board of directors would need immediate firing. Likewise the end use of the tech should have already been ascertained as presenting no conflict with U.S. Govt interests. Intel's sales* to several high level marketing/PR users has already come to an end.

*[SIZE=2] Obviously not "sales" as such to Tiahne-2's upgrade since Intel basically gifted the custom Xeon's and the Xeon Phi co-processors to promote the Xeon Phi ecosystem [/SIZE]
 

Camikazi

TS Evangelist
The irony here is a great portion of market share now being 64bit and AMD is the mother of x86-64.

http://www.theinquirer.net/inquirer/feature/2262881/amd-brought-64bit-to-x86-10-years-ago-today
Unless you want software emulated 32 bit software you still need x86 or you need to completely get rid of all 32 bit software and make sure they are all 64 bit. Until the large majority of software is 64 bit and all companies switch to 64 bit software on their side (probably in 20 years because they are slow) x86 will be needed since software emulation lowers performance.
 

cliffordcooley

TS Redneck
Unless you want software emulated 32 bit software you still need x86 or you need to completely get rid of all 32 bit software and make sure they are all 64 bit. Until the large majority of software is 64 bit and all companies switch to 64 bit software on their side (probably in 20 years because they are slow) x86 will be needed since software emulation lowers performance.
As long as x86-64 remains an extension of x86, you will never see a day they can be separated. While Intel is the mother of x86, we can't deny AMD being the mother of the x64 extension. This is why they both entered a partnership agreement moving forward into the 64 bit era. But when you speak of x86 architecture, you can't exclude the 64-bit extension that AMD brought to the table. Intel is the mother of Itanium which never gained traction in the consumer market.

On a further note software/emulation has no place in a hardware topic. Especially this one where x86-64 also includes x86, so any limitations would be in the software.
 

captaincranky

TechSpot Addict
Hi MikeSnow, welcome to economics 101. If you have a billion dollar company and it goes 39% up, you have a billion and 390 million company now, whether the stocks are at $1 or $1.000.000. If you invested in this company and saw a 39% increase in your investment, you just got about a 3000% more than what would probably the bank gave you for that money for a determined period of time.
I'm starting to see a pattern here. Which would be, the Chinese flooding the world with cheap goods and services, then buying up the carcasses of companies which are failing because of unfair competition.

Also becoming more commonplace are press releases on the order of, "Intel CEO says while speaking at a business conference in China".

This is what I would call, "clandestine world domination 101", how about you?
AMD cutbacks presumably include gardeners. Maybe they are just waiting for the Zombie Apocalypse. The undead work cheaper than immigrant labour
@dividebyzero If you want my opinion, (and face it, who doesn't :rolleyes: ), the undead do better work also.

Since, "Arbeit macht frei", has been already taken, Trump will have to come up with something which says as much for his wall between the US y Mexico.
 
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captaincranky

TechSpot Addict
It's called "Lone Star Campus"... did you expect otherwise?? =P
Probably not. Does that mean they have to wait until the tumbleweeds blow out of the frame before they take the picture...? :D But yet, I don't see a watering trough, a horse tied to a hitching post, or a rowdy saloon anywhere, so how authentic can it be?

I'm still thinking they simply didn't pay the water bill...;)
 

SliceT

TS Rookie
At first I was not that confident about Lisa as CEO, but looks like she's doing good job aligning AMD IP with potential deals. Hopefully now they will have some money to spend on marketing. :D
 

dividebyzero

trainee n00b
At first I was not that confident about Lisa as CEO, but looks like she's doing good job aligning AMD IP with potential deals. Hopefully now they will have some money to spend on marketing. :D
It actually seems to reek of desperation. The monetary gain is extremely modest ( something Su noted in the CC), but giving the Chinese access to core IP carries significant risk. If/when the PRC abuse the scope of the IP agreement, good luck trying to prosecute a case against the Chinese in China and trying to put the genie back into the bottle regarding the black and grey markets.
 

dividebyzero

trainee n00b
To me that 39% increase is not modest *shrugs*
I was referring to the $293m AMD could potentially receive for the x86 IP. If this ends up blowing up in AMD's face they could surrender the Chinese market for short term pocket change.
It should be obvious I was talking about the deal and not the stock price when I referenced Lisa Su's comments in the CC (Conference Call) since the stock price only moved after AMD's announcement...and Su stated that AMD's monetary return wasn't significant and they were hoping for long term royalties. This all would have been apparent if you had listened to the CC or read the call transcript.

Not exactly sure what the stock price has to do with the long term prospects. AMD announce a deal and the stock goes up. It doesn't mean it stays up. I'd be interested to see how the price reacts when the initial investor run is tempered by an analysis of the deal - details AMD have yet to clarify.
 
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lukart

TS Rookie
I think this deal won't blow on AMD's face :D I'm thinking the Chinese will , as usual develop lower end CPUs with AMD IP where that leaves AMD on the higher performance bracket market at different price levels.
 

captaincranky

TechSpot Addict
Should anyone named Lisa Su, even be allowed to sell American technology to the Chinese? Basically it sounds like an espionage novel in the making. Oh, I'm sure y'all will say her Chinese surname is just a "coincidence".....But is it really?

"Lisa Su is a Taiwan-born American business executive" Hmmm.
 

Kibaruk

TechSpot Paladin
@dividebyzero point taken.

Still it's a good move and one they must have thought very throuroughly.

Should anyone named Lisa Su, even be allowed to sell American technology to the Chinese? Basically it sounds like an espionage novel in the making. Oh, I'm sure y'all will say her Chinese surname is just a "coincidence".....But is it really?
American as in Captain America or American as Canada, Mexico, Colombia, Argentina... so on so forth?