Crazy rumor of the day: Microsoft looking to buy AMD?

Posted on Tuesday, June 30 2015 @ 11:26 CEST by Thomas De Maesschalck
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There are so many AMD buyout rumors that we have a hard time taking this seriously but KitGuru claims it received word from a confidential source that Microsoft approached AMD several months ago to discuss a potential takeover. The result of the talks is unclear but KitGuru points out Microsoft could easily scoop up AMD, the software giant has $95.3 billion in cash whereas the market capitalization of AMD is just $1.92 billion right now.

According to the source, one of the reasons Microsoft might be interested in AMD is to get its hands on chip design talent for its Xbox consoles, phones, and other products.
Analysts estimate that Microsoft pays around $100 for every Xbox One system-on-chip to AMD. Life-to-date sales of Xbox One are around are around 12.6 million units, which means that Microsoft has already paid AMD around $1.26 billion for Xbox One chips. The acquisition of AMD could save it around a billion per year on Xbox One chips alone. It the company develops appropriate chips for smartphones and tablets, Microsoft’s savings could be even higher.

It is necessary to note that Microsoft does not really need AMD. The software giant needs system-on-chips to power its Xbox game consoles, Lumia smartphones, Surface tablets and possibly other hardware devices. It does not really need server processors or high-end graphics cards. However, AMD’s management will unlikely sell a part of AMD to Microsoft since its accelerated processing units (what Microsoft needs) are based on technologies developed for server microprocessors and high-end graphics cards.
While these buyout rumors are very entertaining, there's little evidence to suggest a deal is really in the works.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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