AMD has announced plans to acquire SeaMicro, a Silicon Valley startup that specializes in building high-density low-power servers, in a cash and stock deal valued at $334 million. The move came as a bit of a surprise considering all the servers SeaMicro currently sells are based on Intel Xeon or low-power Atom processors, but AMD clearly sees a future for Bulldozer and upcoming architectures in the server room.

SeaMicro's products are based on a innovative technology called Freedom Fabric, an ASIC (Application-Specific Integrated Circuit) that allows a computer to be scaled down to a motherboard the size of a deck of playing cards. These tiny computers are then stacked together to form very-high-density servers, containing up to 768 CPUs, which are as powerful as traditional rackmount servers several times their size while consuming a quarter of the power. They are also compatible with multiple instruction sets and allow for complete hardware virtualization, all of which makes them very desirable for large Cloud-centric data centers.

SM10000-64HD High Density, Low Power Server 

AMD says it plans to keep the company separate once the deal closes in March, and that they will continue to sell and support SeaMicro servers equipped with Intel chips "for the foreseeable future." That being said, they also plan to release the first SeaMicro servers based on AMD Opteron processors by the end of the year.

This means AMD will be competing with some of its customers, but the company claims it has no intentions of becoming a big player as a server vendor. Instead, it hopes to license SeaMicro's fabric technology to other companies, including big names IBM, Dell and HP, as a way to expand the market for their processors.

SeaMicro CEO Andrew Feldman will become general manager of AMD's newly created Data Center Server Solutions group once the deal is closed.