AMD Enters x86 Joint Venture to Build Chinese Servers

While AMD ended the first quarter of 2016 in a bad way, things are looking up ahead. There are the reported semicustom deals set to come through later in the year as well as Polaris and Zen. What’s more, AMD has managed to snag a deal to create an x86 IP joint venture.

In the additional CFO commentary for the quarter, AMD revealed a joint venture with THATIC (Tianjin Haiguang Advanced Technology Investment Co., Ltd) to create SoCs for the Chinese server market. AMD has licensed thier own IP like that from the SeaMicro purchase as well their AMD64 and other SoC related activities. Due to this, AMD managed to get around the deal that made with Intel on x86 patents.

In a boon for the company, there will be limited exposure to the joint venture. Due to only really licensing, AMD won’t get into any trouble if the JV fails miserably. With this setup AMD only really can make profit and take on limited risk.

Finally, the deal will bring in $293 million from just the initial licensing alone. AMD will collect royalties as well on every chip sold which is expected to bring in about $53 million the first year and likely more every year after. With more and more Chinese going online, more servers will be needed. The only potential downside is if their IP gets stolen, a real risk when working with Chinese firms.