AMD absorbs server startup SeaMicro for $330 million, says it's no impulse buy

AMD has faced some tough tactical decisions since it sold its handheld chip division to Qualcomm in 2008 and effectively stepped out of the smartphone business. Whistling that "No Regrets" tune, it has burrowed ever deeper into ever bigger devices, from laptops to desktops and massively multi-core servers and supercomputers. Today's purchase of Silicon Valley startup SeaMicro is an exponential leap in the same direction, because SeaMicro specializes in building low-power server hardware for entire datacenters. One of its key innovations is a "fabric" that hooks up thousands of processors, memory units and storage devices into a sensible whole for cloud computing. Rather than trying to compete with its own server-building customers, AMD may well offer them SeaMicro's platform on license and seek to recoup its $330 million investment that way. With ARM also stepping up its server efforts, it's a question of snoozing and losing.

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AMD to Acquire SeaMicro: Accelerates Disruptive Server Strategy

SeaMicro Low-Power, High-Bandwidth Microserver Solutions Set the Stage for AMD's Disruptive Approach To Lead Fast-Growing Cloud Data Center Market

SUNNYVALE, Calif. -2/29/2012
AMD (NYSE: AMD) today announced it has signed a definitive agreement to acquire SeaMicro, a pioneer in energy-efficient, high-bandwidth microservers, for approximately $334 million, of which approximately $281 million will be paid in cash. Through the acquisition of SeaMicro, AMD will be accelerating its strategy to deliver disruptive server technology to its OEM customers serving cloud-centric data centers. With SeaMicro's fabric technology and system-level design capabilities, AMD will be uniquely positioned to offer industry-leading server building blocks tuned for the fastest-growing workloads such as dynamic web content, social networking, search and video.

AMD's server technology combined with SeaMicro technology provides customers with a range of processor choices and platforms that can help significantly reduce data center complexity, cost and energy consumption while improving performance. AMD plans to offer the first AMD Opteron™ processor-based solutions that combine AMD and SeaMicro technology in the second half of 2012. The company remains firmly committed to its traditional server business, and will continue to focus and invest in this area.

"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, president and CEO, AMD. "SeaMicro is a pioneer in low-power server technology. The unmatched combination of AMD's processing capabilities, SeaMicro's system and fabric technology, and our ambidextrous technology approach uniquely positions AMD with a compelling, differentiated position to attack the fastest growing segment of the server market."

SeaMicro technologies offer substantial advantages in large data center and cloud environments. Cloud data centers are projected to be the fastest growing segment of the server market through 2015, according to IDC1.

Current systems featuring SeaMicro technology typically use one quarter the power and take one sixth the space of traditional servers with the same compute performance, yet deliver up to 12 times the bandwidth per core2.

Foremost among SeaMicro's innovations is their supercompute fabric, which connects thousands of processor cores, memory, storage and input/output traffic. SeaMicro's fabric supports multiple processor instruction sets. SeaMicro solutions are currently deployed in multiple sites across the world. AMD will continue to support all current SeaMicro customers while accelerating plans to deliver new platforms that combine AMD and SeaMicro technology and enable AMD's OEM partners to bring differentiated solutions to market.

"Cloud computing has brought a sea change to the data center--dramatically altering the economics of compute by changing the workload and optimal characteristics of a server," said Andrew Feldman, SeaMicro CEO, who will become general manager of AMD's newly created Data Center Server Solutions business. "SeaMicro was founded to dramatically reduce the power consumed by servers, while increasing compute density and bandwidth. By becoming a part of AMD, we will have access to new markets, resources, technology, and scale that will provide us with the opportunity to work tightly with our OEM partners as we fundamentally change the server market."

The acquisition does not change AMD's 2012 financial guidance and the transaction is expected to be accretive to earnings after 2012. AMD will fund the cash portion of the acquisition with existing cash reserves.