AMD to receive $293M in fresh cash from a deal with the Chinese Government

[DuckDodgers]

 

After many years of numerous unsuccessful attempts to come up with its own microprocessor architecture line (and thriving market around it), the Chinese Government finally took the bite and asked the infamous cash strapped AMD for a custom x86-based IP solution. AMD already made it clear in their marketing strategy, that they are ready to customize modular CPU and SoC designs by the client's specs, as evident in the current generation of videogame consoles. The company hopes to extend this business model from the HPC down to industrial embedded devices.

 

Quote

AMD is likely to fab custom enterprise CPUs for the Chinese Government. The deal was mentioned in the latest quarterly results. China, or the Chinese government  struggles to design their own proprietary chips. This deal could fetch AMD USD $293 million in cash.

 

China wants their “own” hardware and software for government-funded institutions. This was driven by the Snowden revelations and the cooling of the China economy. For software, it means submitting source code to inspect for things like back doors, but also having Chinese institutions buy software from Chinese software vendors.  It’s a bit more complex on the hardware side. Net-net, on the server side it involves Chinese companies integrating core IP from western countries, adding their own “special sauce” like security and accelerators and selling to Chinese server OEMs.  This is exactly what happened with Advanced Micro Devices announcement today of its China JV reports forbes.com

 

Advanced Micro Devices (AMD) has created a JV with THATIC (Tianjin Haiguang Advanced Technology Investment Co., Ltd.) to develop SoCs for the Chinese server market. Essentially, AMD will license its x86 processor technology and the IP (intellectual property) related to designing an SoC (system on chip), so I expect this involves IP like memory controllers, input/output and caching, but not GPU technology.

 

Source: http://www.guru3d.com/news_story/amd_china_x86_server_chip_joint_venture_brings_them_293_million_in_cash.html

[noisebomb44]

We need a china uncensored episode on this

[Castdeath97]

For anyone that is more accustomed with business and economics, how much will this help AMD if it will at all?

[Clonzoo]

7 minutes ago, Castdeath97 said:

For anyone that is more accustomed with business and economics, how much will this help AMD if it will at all?

I might not be the right person to answer this. But the 300m they receive is like pissing in the ocean hoping it will rise. They are already in deep fucking shit and this deal will not help them staying a float for even a month.

[raphidy]

I don't know if accurate AMD's Q1: http://wccftech.com/amd-q1-2016-earnings-financials/

[deviant88]

23 minutes ago, Clonzoo said:

I might not be the right person to answer this. But the 300m they receive is like pissing in the ocean hoping it will rise. They are already in deep fucking shit and this deal will not help them staying a float for even a month.

Honestly 300m is a lot of cash, someone with brain can use that money wisely and make profit, if they keep sinking it in APU's and wasted tech ofcourse it wont make a difference, judging by the past business of AMD they cant make profit even if someone puts the opportunity on their table.

[Sauron]

43 minutes ago, Castdeath97 said:

For anyone that is more accustomed with business and economics, how much will this help AMD if it will at all?

I'm not an expert, but the real deal here is preferential access to the chinese market

[Clonzoo]

24 minutes ago, deviant88 said:

Honestly 300m is a lot of cash, someone with brain can use that money wisely and make profit, if they keep sinking it in APU's and wasted tech ofcourse it wont make a difference, judging by the past business of AMD they cant make profit even if someone puts the opportunity on their table.

300M is nothing when they are up against companies like intel and Qualcomm. The deal as @Sauron says, they now have a foot in the Chinese market, and that is the big deal here, the 300M is piss in the ocean when they are loosing 400 - 600M. AMD has to do something drastic, put I doubt it can save them. If they keep going down like this it will eventually be bought up by the bigger fishes out there. Like Microsoft and Samsung which have been sniffing things out and I seem to recall google also did some sniffing. And there is one rather huge mistake by AMD announcing "We're not for sale!" they should have made a deal with Samsung. Because since the last 10 years all AMD has seen is red numbers, and red numbers are never good.

[Coaxialgamer]

Ok , so before anyone says anything :

 

 

Anyway . 300M $ isn't much if you compare it to revenue of companies like qualcomm , intel etc.

But i think this will be another case of hard work by amd for a very slim profit ( just like the console apu's )

[SparkyRain]

Might be just me but do they try to step in with china only that they have less quality regulations over there? Not saying amd makes bad products but they don't really make competitive products anymore. 

 

China is much likely a low budget market where they could sell more units after they got that government deal off the table.

[Castdeath97]

41 minutes ago, Coaxialgamer said:

Ok , so before anyone says anything :

 

 

Anyway . 300M $ isn't much if you compare it to revenue of companies like qualcomm , intel etc.

But i think this will be another case of hard work by amd for a very slim profit ( just like the console apu's )

But it will probably set their foot in the Chinese market the same way they did in the console market where AMD is the go to this generation.

[Trik'Stari]

insert my usual ship sinking gif here

 

Sadly, the people at the head of AMD need a good kick in the ass, or to be replaced all together. They need to quit screwing around with crap like APU's. Quit rebranding GPU's generation after generation, and actually MAKE. SOMETHING. NEW. Something that people actually want to buy. They had a step in the right direction with the Fury, but they need to keep doing it bigger and better. Put HBM on all the 400 series, allow overclocking, etc.

 

TL;DR: AMD, quit half assing everything.

[Tomsen]

300m might see like nothing compared to their dept, but to be profitable you need some cash assets to invest.

Which is why it might be more important than it sounds.

 

The chinesse is all in on hardware. They are not focusing on been competitive on a performance metric in the short run, but rather to completetly replace western hardware in the long run.

[Lethal Seraph]

I'm gonna call it first that the US government has those chips compromised for state spying.

[Prysin]

4 hours ago, Castdeath97 said:

For anyone that is more accustomed with business and economics, how much will this help AMD if it will at all?

they are getting 50m right away, then over the years they will get 300m total + royalties. WITH NO OPERATING EXPENSES.

So it is pure monetary profit.

If ZEN and Polaris is a success, this agreement will greatly help them in generating the money they need to pay the upcoming debt downpayments in 2019.

[crystal6tak]

3 hours ago, Clonzoo said:

300M is nothing when they are up against companies like intel and Qualcomm. The deal as @Sauron says, they now have a foot in the Chinese market, and that is the big deal here, the 300M is piss in the ocean when they are loosing 400 - 600M. AMD has to do something drastic, put I doubt it can save them. If they keep going down like this it will eventually be bought up by the bigger fishes out there. Like Microsoft and Samsung which have been sniffing things out and I seem to recall google also did some sniffing. And there is one rather huge mistake by AMD announcing "We're not for sale!" they should have made a deal with Samsung. Because since the last 10 years all AMD has seen is red numbers, and red numbers are never good.

Out of curiosity, just how long does AMD have assuming they don't do anything drastic?

[Tomsen]

7 minutes ago, crystal6tak said:

Out of curiosity, just how long does AMD have assuming they don't do anything drastic?

There are no answer to that. Could be 2 years, could be 20.

[Clonzoo]

12 minutes ago, crystal6tak said:

Out of curiosity, just how long does AMD have assuming they don't do anything drastic?

I'd say 6 year assuming they keep loosing at the rate which they currently are. I'll give them about 2 - 4 years at the most. Since its hard to keep loosing stable because it ripples outwards and the downward fall only gets steeper. However, this is with info I have found with a few quick google searches and simple napkin math. I am far from an expert so don't go quoting me left and right.

[Clonzoo]

Quoted myself instead of editing. Please delete this.

[dalekphalm]

This cash injection could very well be crucial to their recovery. AMD still has time - they have enough cash and assets to keep operating for several more years. And the last several years have had most of their revenue put towards R&D costs for engineering both Polaris AND Zen. A good architecture takes time and planning - something AMD seems like they are doing.

 

Polaris launches in a few months - so if these cards are as good as we hope - and AMD gets their marketing/PR department in order, then they'll see a huge cash influx from that.

 

Zen is supposed to launch either late Q42016 or sometime in 2017 - so that's less then a year away most likely. Yes, of course, they have to keep investing in future R&D, but these 2 new architectures are right around the corner, and if they're good, they will bring a LOT of cash in to AMD.

Once they have the income from Zen/Polaris flowing in, then they'll have time to pay down debts and split the profit into R&D and other areas where it's needed.

[Sunako]

Certain laws still restrict what processor tech is allowed to be given to other countries as well as selling chips to those counties. So either the USA sees AMD's tech as something to not worry about or they are getting something at least 8 years old to keep China from creating supper cumputing capabilities.

[Tomsen]

6 hours ago, DuckDodgers said:

the Chinese Government finally took the bite and asked the infamous cash strapped AMD for a custom x86-based IP solution.

This is not what I'm hearing. What I'm hearing, it is more related to SoC technologies than a x86 solution.

 

EDIT: Relevant article (however behind paywall): http://semiaccurate.com/2016/04/22/38522/

EDIT EDIT: Remember that china is still working on the loongson project

[patrickjp93]

6 hours ago, Clonzoo said:

I might not be the right person to answer this. But the 300m they receive is like pissing in the ocean hoping it will rise. They are already in deep fucking shit and this deal will not help them staying a float for even a month.

Eh, if it helps them pay off that $600 million bill on Jan 1st 2019, then it could keep them afloat by an extra year. That said, unless Zen and Zen+ break the perception AMD is just that inferior, it won't have a palpable effect.

 

7 minutes ago, Sunako said:

Certain laws still restrict what processor tech is allowed to be given to other countries as well as selling chips to those counties. So either the USA sees AMD's tech as something to not worry about or they are getting something at least 8 years old to keep China from creating supper cumputing capabilities.

Or AMD hasn't cleared this with regulators yet. IBM made the same assumption a few years back with Huawei and had the FTC up their tail end within a month.

[shdowhunt60]

3 hours ago, Lethal Seraph said:

I'm gonna call it first that the US government has those chips compromised for state spying.

More likely to have it the other way around. The CCP will likely request that AMD will have some sort of hardware backdoor that could be exploited to exert its totalitarian rule over the Chinese people. It's sad, but AMD is desperate and they absolutely need whatever money they can get.

[Misanthrope]

4 hours ago, Trik'Stari said:

insert my usual ship sinking gif here

 

Sadly, the people at the head of AMD need a good kick in the ass, or to be replaced all together. They need to quit screwing around with crap like APU's. Quit rebranding GPU's generation after generation, and actually MAKE. SOMETHING. NEW. Something that people actually want to buy. They had a step in the right direction with the Fury, but they need to keep doing it bigger and better. Put HBM on all the 400 series, allow overclocking, etc.

 

TL;DR: AMD, quit half assing everything.

I don't quite agree with you.  What they need to do is much simpler: stop sucking. 

 

Seriously the rebrands, lack of new products, endless iterations of sucky APUs all goes back to investing a lot in a product that was a fucking flop. 

 

Unlike Intel, they sank too much into the ATI purchase to come up with a crappy architecture. They had to find ways to sell it otherwise they can't reinvest in R&D but since the cpu sucked they couldn't get enough money in time so they're now 3 or 4 years behind Intel and Zen it's still a year behind. 

 

Their only hope is that cpus are so underused that getting the chips to Broadwell level as rumored with aggressive pricing, overclocking for all,  low power consumption. Etc.  Can help them boost up again.