Advanced Micro Devices To Buy Server Startup SeaMicro -Sources
Last update: 2/29/2012 1:44:36 PM
By Shara Tibken Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Advanced Micro Devices Inc. (AMD) has agreed to buy a startup that makes low-power servers, according to people familiar with the matter, helping the chip bellwether broaden its reach in the fast-growing industry.
AMD plans to announce later Wednesday the deal for SeaMicro Inc., a Silicon Valley maker of so-called "micro servers," the people said. SeaMicro is a long-time partner of AMD rival Intel Corp. (INTC) and last month unveiled products with the larger chip company.
The Sunnyvale, Calif.-based AMD declined to comment. The deal's price and conditions weren't immediately available.
AMD has long battled Intel in making chips for servers and PCs, but the two companies face increasing competition from companies making lower-power chips that are based on architecture developed by ARM Holdings PLC (ARMH, ARM.LN). Hewlett-Packard Co. (HPQ) last year announced a partnership with Calxeda Inc., a startup making ARM-based server chips.
To address the threat from ARM-based chip makers, Intel and AMD have focused their attention on micro servers. The products, just a tiny fraction of the server market now, are seen as an emerging area and recently received an endorsement from social-networking company Facebook Inc. Micro servers offer lower costs, consume less energy and can be used outside a traditional data center. Intel has said the group could represent 10% of servers by 2015.
SeaMicro, meanwhile, attracted attention in the industry by reversing the priorities of most computer makers. Instead of focusing on greater performance for all kinds of computing jobs, the company tailored its servers for a narrower set of Internet-type chores while conserving electrical power and space--two big issues for companies building out computer rooms.
The startup originally passed up Intel's mainstream offering for servers, a chip called Xeon that is a workhorse for companies around the around the world. SeaMicro took the tiny, relatively low-powered Atom chip -- best known for use in inexpensive laptop computers called netbooks and now in smartphones -- and packaged it for use in data centers.
SeaMicro last month held an event with Intel and Samsung Electronics Co. (SSNHY, 005930.SE) to detail plans to use Xeon chips in its new machines. That shift, the company said at the time, allows customers to use its machines for an array of new tasks that could not be addressed before, such as running Web databases rather than simply serving up Web pages.
AMD's deal represents the first notable acquisition for new CEO, Rory Read, who replaced the fired Dirk Meyer in August. The company had struggled with manufacturing problems but now says the issues are resolved. AMD also has replaced much of its senior management and laid off about 10% of its staff in November.
Earlier this month, AMD detailed its longer-term plans, saying it may pursue what it calls an "ambidextrous" strategy that would allow it to offer chips that include circuitry developed by other companies as well as its own. The company also stressed its focus on the server market.
