Is Microsoft to acquire the struggling chip maker AMD???
According to an unnamed source which is close to the matter says, Microsoft may be interested in buying AMD.
The software giant approached AMD several months ago, the source indicated. The result of the talks is still unclear.
Microsoft has a lot to gain by acquiring AMD’s APU business, given the Redmond giant’s ambitions in the console gaming segment. Both the Xbox One and PlayStation 4 use AMD’s Jaguar-architecture APU, and if Microsoft were to buy AMD, Sony will have to shell out a significant amount of money to Microsoft on each PlayStation sold.
Microsoft Corp. has been selling game consoles for over ten years now and back in 2006 the firm even formed a division to design chips for its products, primarily game consoles. While this internal group has clearly developed some chips for Microsoft’s hardware, the company used chips designed by Advanced Micro Devices and Nvidia Corp. for its Xbox One consoles and Zune players, respectively. As it appears, Microsoft’s own chip design team cannot really develop competitive solutions for the company’s devices and in order to make its chip operations viable.
Microsoft has $95.3 billion in cash, whereas AMD’s market capitalization right now is $1.81 billion, the software giant may buy AMD relatively easily. Current value of AMD is three times lower than what the company paid for ATI Technologies in 2006.
AMD has several innovative technologies that will surely attract other game players in the market to acquire. However it will be rally interesting to see what really comes out of this deal.
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