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Blog
Monday, November 26, 2007
Should Apple acquire AMD?
Nov 26 2007 7:38AM | Permalink |Comments (16) |
I laughed out loud when I first saw this article from Seeking Alpha titled, “10 reasons why Apple should acquire AMD,” and nearly dismissed it but decided to go ahead and read it, even though it sounded far-fetched. It turned out to be quite amusing in the end.
Seeking Alpha’s author wonders since AMD’s stock price has been deteriorating if Apple could be its white knight.
I couldn’t follow the reasoning on several items, particularly one about AMD’s new Spider ‘chip,’ which I wrote about recently. Seeking Alpha said “Apple will have better integration for its computer, particularly considering the new AMD Spider chip that combines AMD-ATI CPU and graphics in one chip.” Unfortunately, they are off the mark here since Spider is not a chip, it is a gaming platform that combines chips, software and hardware.
Another point that stood out to me was, “The government will be glad and the deal won’t face challenge by government regulation of monopoly and competition policy.” I don’t agree with this point -- you can be sure that anything related to Intel in any way in on the radar of the U.S. government. Plus, I don’t think companies enter into m&a activity based a whole lot on whether they think it is a good chance it will or won’t be examined by the authorities….but hey, I could be wrong.
Please do check out the reasons cited in the article, then read this blog post from engineering student “Charlie” in his blog Random Process. I think he makes some well-educated points in disagreement with Seeking Alpha.
After you read both entries, let me know what you think by commenting below.
--Ann Steffora Mutschler, Senior Editor
Reader Comments
at 11/26/2007 11:09:27 AM, Lou Covey said:
Here are a few other reasons why it would not work:
1. Buying AMD puts Apple directly into a business it has little experience in: chip building. Apple has experience in jacking around chip companies to keep costs low, but has no idea what it takes to build a chip. Steve Jobs believes in moving up the food chain, not down.
2. It locks Apple into a specific processor, even if it is an Intel-like
device. If someone comes up with a multicore design that blows the socks of the Intel/AMD format, Apple would want to be able to consider it. Owning the structure would make them less flexible.
3. Being a chip company opens Apple to all kinds of additional government scrutiny and law suits. They are already taking hits from the green community. They don't want any more.
4. AMD sells lots of chips to Wintel-based computer companies. Apple would not want to help them succeed.
at 11/26/2007 1:01:37 PM, Stallings said:
So, the Fox Business Channel idiotically reports that Apple might buy AMD and the story is considered to have legs?
at 11/26/2007 1:21:48 PM, Desert Rat said:
For several previous years, Wall Street was saying that Sun should buy AMD. I guess, since Sun didn't buy them, they had to find a new recommendation...for Apple to buy them. What's most interesting here is that AMD is regularly being proffered as a buy-out candidate for somebody.
at 11/26/2007 3:07:34 PM, comment said:
High end chip business is very expensive. That is the reason AMD is struggling to compete with Intel. It is very very very expensive to build a state of the art fab. If Apple buys AMD, it will face the same consequence as AMD, running out of money competing with Intel. If I were Steve Jobs, I will not even think about it. It is stupid to elimate a competition from a major vendor.
at 11/26/2007 3:18:49 PM, Phil said:
I think a much better case could be made for Samsung buying AMD then Apple.
SEC is a semiconductor company
SEC competes with INTC in the mobile processor space (not computers but handheld)
SEC has fabs
SEC dominates DRAM and Flash in mobile and computer platforms
SEC has LSI technology
...
at 11/26/2007 6:06:15 PM, Mohan said:
I think that the Marriage of Apple & AMD would be a total misfit from the business point of view.
1. I believe that the computing side of the Apple business is stagnating - if not dying.
2. Apple should concentrate more on their iPod & iPhone.
at 11/26/2007 7:50:27 PM, Ann Mutschler said:
Thanks to everyone for your good points. Keep them coming! I also wonder what would happen with the long-settled patent issues between Intel and AMD. Would a sale of AMD impact the settlement between them?
at 11/27/2007 5:30:18 AM, Just Another Engineer said:
Interesting idea, really. Apple routinely requires above-and-beyond innovation that means new chips that push the envelope - which means pushing their suppliers. Having their own fabs and design groups fed from the Apple idea factory would take Apple's innovative capability to the next level. Currently their computers are enjoying a deserved resurgence in popularity - and this is partly due to using Intel silicon. Maybe buying a CPU manufacturer would continue/boost this trend? Fabs ARE expensive, but they also create opportunities to innovate. Great 'what if' scenario to ponder.
at 11/27/2007 5:56:12 AM, Larry M said:
at 11/26/2007 3:18:49 PM, Phil said:
"SEC is a semiconductor company SEC competes with INTC in the mobile processor space (not computers but handheld)" <p>
Naah. Intel sold the Xscale product line to Marvell in June 2006.
at 11/27/2007 11:51:02 AM, Dave said:
I'm neither for or against but the market for computing platforms is changing greatly. The iPhone may be the next computing platform where the major battles are fought, but that doesn't mean we all throw out our laptops etc. Apple has been involved in chips before in that it worked with 3rd parties for ASIC designs in it's computing platforms, but never on the processing side. Would it go back that way, well if you added in the main processor then maybe that makes more sense as cost becomes the driver. Look at PC's they are all now such low cost items that Intel and AMD are designing the systems and Dell, etc. are just becoming the marketing arm. Apple is more than that. But then if the iPhone is the next computing platform then maybe getting the right processor in there for flexibility and compatibility with the other platforms could be a driver. So who knows. Maybe it would make sense, let's face it, who ever thought the music industry needed another portable player 10 years ago.
at 11/27/2007 5:54:43 PM, CYI said:
Apple, whose market cap is now greater than that of IBM or Dell or Intel, can certainly afford to buy AMD, but why would they want to? AAPL''s core competency is its ability to create cool consumer products with innovative human-machine interfaces. AAPL is the king of cool. Even the Mac is now being marketed as a cool consumer product. I just don''t see how buying a microprocessor company would make them any cooler than they already are.
at 11/27/2007 7:14:09 PM, S. Uy said:
Apple knows what it has to do and that is to focus on computing platforms. It does not want to bother with making chips because if it wants to jump into that, it would have retained its partnership with IBM. It would continue using the POWER architecture and help in solving the power requirements for mobile devices. Staying away from chip manufacturing gives Apple the advantage of being agile.
at 11/28/2007 7:25:48 PM, jojostar said:
samsung should buy AMD to get processor market share and knowledge, bestt fit and woul make a very strong competitor to Intel
at 12/3/2007 1:10:57 PM, Pete said:
AMD needs high end manufacturing capacity to compete with Intel. This means more than one Fab. Intel has 4 fabs either up or coming up for 45nm alone. Apple getting involved with AMD would be just dumb. But Samsung helping AMD might be good for AMD, Samsung and other DRAM manufacturers if it meant that DRAM capacity was used for processors. In many ways Samsung is Intel's biggest threat.
at 12/12/2007 1:53:19 PM, applejoke said:
at 11/26/2007 1:21:48 PM, Desert Rat said:
For several previous years, Wall Street was saying that Sun should buy AMD. I guess, since Sun didn''t buy them, they had to find a new recommendation...for Apple to buy them.
__
I wouldn''t really consider Seeking Alpha "Wall Street"
at 1/2/2008 1:57:26 PM, Ximitao said:
Intel buy AMD makes more sense...
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