The real shocker in AMD's earnings announcement was the disclosure of a joint-venture it has formed with THATIC (Tianjin Haiguang Advanced Technology Investment Co., Ltd.) to develop SoCs for the Chinese server market. Under the deal, AMD licenses x86 and related SoC chip technology to the joint-venture in exchange for a licensing fee of $293 million plus royalties on future product sales.
AMD licensed high-performance processor and SoC technology to a newly-created JV it has formed with THATIC (Tianjin Haiguang Advanced Technology Investment Co., Ltd.) to develop SoCs tailored to the Chinese server market that will complement AMD's own offerings. The $293 million licensing agreement is a meaningful step in AMD's IP monetization strategy intended to accelerate the Company's growth and better monetize its valuable assets. Payments are contingent upon the JV achieving certain milestones. AMD also expects to receive royalty payments from the JV's future product sales.
"Our new licensing agreement is a great example of leveraging our strong IP portfolio to accelerate the adoption of our technologies more broadly," said Dr. Su. "The joint venture with THATIC provides AMD with a differentiated approach to help gain share in the fastest growing region of the server market."
Not a lot of information was revealed but it's going to be interesting how Intel responds to this. It seems that, for its part, AMD believes the joint-venture does not violate the cross license agreement it has with Intel. The move gives AMD a fresh cash infusion and a new income stream but it coud cause some legal issues.