IBM acquisition or investment in AMD...

[hizark21]

I wonder if now that AMD is short of capital that IBM is considering a
equity stake in AMD or a outright acquisition. This would make sense
since AMD already has a lot of marketshare.

 

[General Schvantzkoph]

I wonder if now that AMD is short of capital that IBM is considering a
equity stake in AMD or a outright acquisition. This would make sense
since AMD already has a lot of marketshare.

AMD is exactly the sort of business IBM is selling, not buying. They sold
their disk drive division and their PC division because those were
volatile low margin commodity businesses. The kind of businesses that they
are buying are software and services.

 

[hizark21]

Actually it advantageous to IBM in a number of ways:
CPU's are still a high value market. The other advantage is that AMD
is in a fairly strong position in the X86 market. One thing to
remember is that AMD still holds a considerable advantage in 64 bit
computing. With the exception of Intel's Itanium chip all others use a
32 bit core with 64 bit extensions. suspect that IBM would probably
invest, but not acquire AMD. This would be help throw Intel off
balance.

 

[General Schvantzkoph]

Actually it advantageous to IBM in a number of ways:
CPU's are still a high value market. The other advantage is that AMD
is in a fairly strong position in the X86 market. One thing to
remember is that AMD still holds a considerable advantage in 64 bit
computing. With the exception of Intel's Itanium chip all others use a
32 bit core with 64 bit extensions. suspect that IBM would probably
invest, but not acquire AMD. This would be help throw Intel off
balance.

Where have you been the last 6 months?. The Core2 Duo (which is a 64 bit
chip) is crushing the A64. AMD is hemorrhaging money because they don't
have a competitive chip so they are forced to slash their margins. The
situation was reversed a year ago when AMD was wiping the floor with
Intel. That's the nature of the CPU market, the guy with the newest chip
makes money while the other guy loses money. IBM is getting out of
businesses like that and concentrating on businesses that higher margins
and better customer lockin.

 

[ASAAR]

Where have you been the last 6 months?. The Core2 Duo (which is a 64 bit
chip) is crushing the A64. AMD is hemorrhaging money because they don't
have a competitive chip so they are forced to slash their margins. The
situation was reversed a year ago when AMD was wiping the floor with
Intel. That's the nature of the CPU market, the guy with the newest chip
makes money while the other guy loses money. IBM is getting out of
businesses like that and concentrating on businesses that higher margins
and better customer lockin.

Are you sure the IBM is retreating from the CPU market? Here's
the first 1/4 of an article in today's (now yesterday's) NY Times.
A similar article was published by BBC News.

January 27, 2007
Intel Says Chips Will Run Faster, Using Less Power
By JOHN MARKOFF
Intel, the world’s largest chip maker, has overhauled the basic building
block of the information age, paving the way for a new generation of
faster and more energy-efficient processors.

Company researchers said the advance represented the most significant
change in the materials used to manufacture silicon chips since Intel
pioneered the modern integrated-circuit transistor more than four
decades ago.

The microprocessor chips, which Intel plans to begin making in the
second half of this year, are designed for computers but they could
also have applications in consumer devices. Their combination of
processing power and energy efficiency could make it possible, for
example, for cellphones to play video at length — a demanding
digital task — with less battery drain.

The work by Intel overcomes a potentially crippling technical obstacle
that has arisen as a transistor’s tiny switches are made ever smaller:
their tendency to leak current as the insulating material gets thinner.
The Intel advance uses new metallic alloys in the insulation itself and
in adjacent components.

Word of the announcement, which is planned for Monday, touched off
a war of dueling statements as I.B.M. rushed to announce that it was on
the verge of a similar advance.

I.B.M. executives said their company was planning to introduce a
comparable type of transistor in the first quarter of 2008.

Many industry analysts say that Intel retains a six-month to nine-month
lead over the rest of the industry, but I.B.M. executives disputed the
claim and said the two companies were focused on different markets in
the computing industry.

The I.B.M. technology has been developed in partnership with Advanced
Micro Devices, Intel’s main rival. Modern microprocessor and memory
chips are created from an interconnected fabric of hundreds of millions
and even billions of the tiny switches that process the ones and zeros that
are the foundation of digital computing.

. . .

http://www.nytimes.com/2007/01/27/t...&en=b5dab5ed9a363262&ei=5094&partner=homepage


http://www.nytimes.com/2007/01/27/t...=1169960400&partner=homepage&pagewanted=print

The first link is to the first page of the article, complete with
photo and sidebar diagrams. The second is to the full article which
only contains its text. If you get there fast enough you'll
presumably be able to read it without registering (not sure about
this) or paying for the article. BBC News has a similar, somewhat
less detailed article at

http://news.bbc.co.uk/2/hi/technology/6299147.stm

 

[General Schvantzkoph]

Are you sure the IBM is retreating from the CPU market? Here's
the first 1/4 of an article in today's (now yesterday's) NY Times.
A similar article was published by BBC News.

IBM is still producing lots of chips including Power PCs. But those are
all used in large mainframe and server systems where the margins are good.
They might even be selling the PowerPC chips to s few select OEMs. What
they aren't doing is selling raw commodity chips.

 

[Ed]

Where have you been the last 6 months?. The Core2 Duo (which is a 64 bit
chip) is crushing the A64. AMD is hemorrhaging money because they don't
have a competitive chip so they are forced to slash their margins. The
situation was reversed a year ago when AMD was wiping the floor with
Intel. That's the nature of the CPU market, the guy with the newest chip
makes money while the other guy loses money. IBM is getting out of
businesses like that and concentrating on businesses that higher margins
and better customer lockin.

Actually most of AMDs woes right now was paying off some of the debt on
ATI, the price war with Intel is hurting both AMD and Intel, overall AMD
gained more share in Q4 05,Intel only gained a few points in servers and
lost everywhere else, even their chipset biz lost money.

Intel still has over $4 Bil in inventory (it went up in the last Qrt)
where as AMD has something like $814 Mil in inventory.

The fun part is AMD and Intel both said the price wars will continue,
that's great news for us, and AMD has been through harder times then
this, with ATI they have a much better chance of not loosing their ass
like years in the past when all they had was 1 CPU fab and 1 old FLASH
fab.

Intel has a lot of fabs, but only a few can make core 2's, all the other
fabs are still making P4s on 90nm & 65nm, overall things aren't as bleak
for AMD as they might seem.

Ed

 

[ASAAR]

IBM is still producing lots of chips including Power PCs. But those are
all used in large mainframe and server systems where the margins are good.
They might even be selling the PowerPC chips to s few select OEMs. What
they aren't doing is selling raw commodity chips.

Interesting that you had nothing to say about the part of the
article that discussed AMD's involvement in helping IBM to develop
this new technology. I guess that some Generals are more likely
than others to treat dissenting views as insubordination.

 

[General Schvantzkoph]

Interesting that you had nothing to say about the part of the
article that discussed AMD's involvement in helping IBM to develop
this new technology. I guess that some Generals are more likely
than others to treat dissenting views as insubordination.

IBM cooperating with AMD is unrelated to the original thread which asked
if it made sense for IBM to buy AMD. IBM cooperating with AMD on
semiconductor process and manufacturing is an entirely different subject.
IBM and AMD have had a cooperation agreement for years. This sort of
agreement is extremely common. The cost of developing a new process and
building new FABs is staggering, it's in the billions of dollars. Intel
can afford to do it on their own, almost nobody else can. Most
"semiconductor" companies these days outsource their manufacturing so they
can avoid those costs, for example both Xilinx and Altera are FABless.
Being completely FABless isn't a route AMD has been willing to go down
because control over the process is so important to them. The other
alternative to doing it all yourself is to cooperate with another company
and share the costs. That's what most of the DRAM companies do and that's
what IBM and AMD are doing. AMD does outsource some of their production
and the do some in house. By making sure they use the identical process as
IBM it makes it possible to have IBM build chips for them. From IBM's
point of view this helps to keep their FABs busy. If you are going to
spend billions of dollars to build a new FAB line you want to guarantee
that it's 100% busy. IBM's internal needs aren't great enough to use the
full capacity of a modern FAB so they build chips for other companies
including AMD.

 

[ASAAR]

IBM cooperating with AMD is unrelated to the original thread which asked
if it made sense for IBM to buy AMD. IBM cooperating with AMD on
semiconductor process and manufacturing is an entirely different subject.

The General needs to spend some time in the stockade for his
logical lapses. Why should I restrict myself to discussing whether
it makes sense for IBM to buy AMD when you also didn't. My reply
was in response to where you said:

The situation was reversed a year ago when AMD was wiping the
floor with Intel. That's the nature of the CPU market, the guy with
the newest chip makes money while the other guy loses money. IBM
is getting out of businesses like that and concentrating on businesses
that higher margins and better customer lockin.

You said that IBM was getting out of the type of businesses that
the news reports have them as being quite active in. Is that not
so, and if you can discuss IBM's and AMD's CPU business activities
(which should be *very* On Topic for this newsgroup) shouldn't I be
able to as well? Based on this thread I certainly won't have as
high a regard for your posts as I once did. Very strange. I've
been very inactive in this ng recently so I don't know if you've
been pestered by some of the trolls and loonies that occasionally
intrude, but your reaction to my replies seems more in character
with one or two of the other regulars here than to you.

 

[General Schvantzkoph]

The General needs to spend some time in the stockade for his
logical lapses. Why should I restrict myself to discussing whether
it makes sense for IBM to buy AMD when you also didn't. My reply
was in response to where you said:


You said that IBM was getting out of the type of businesses that
the news reports have them as being quite active in. Is that not
so, and if you can discuss IBM's and AMD's CPU business activities
(which should be *very* On Topic for this newsgroup) shouldn't I be
able to as well? Based on this thread I certainly won't have as
high a regard for your posts as I once did. Very strange. I've
been very inactive in this ng recently so I don't know if you've
been pestered by some of the trolls and loonies that occasionally
intrude, but your reaction to my replies seems more in character
with one or two of the other regulars here than to you.

I'm not trying to jump on you and I apologize if that's what you thought I
was doing. I was just trying to limit the thread drift which as you know
is endemic to newgroups in general. My original response in this thread
was to point out that IBM was selling businesses like the CPU business and
buying software businesses. In the last few years IBM has been buying
software companies left and right, I can't think of a single hardware
company that they've bought (you are free to give me a counter example).
They've also sold some large businesses, most prominently there disk drive
division and their PC division. The disk drive business is exactly like
the x86 CPU business. They are interchangeable parts that are on a sharp
technology curve, if you are late in any generation you get pounded in the
marketplace and even if you stay on the curve you face constant price
pressure. The kind of business they like are those that have a large
component of customer lock in. It's hard for a Notes customer to migrate
to Exchange for example, it's not a decision a big institution is likely
to make on a whim. On the other hand a Dell or an HP is going to be
adjusting their CPU orders continuously. If the demand for Intel systems
is higher than for AMD systems then they are going to buy more Intel
chips. The company with the slower chip will be forced to slash prices to
compete, which in turn forces the other company to slash prices. That's
what's happening now. I don't want to own stock in either Intel or AMD at
the moment and I'm sure that IBM doesn't want to either. You brought up
the issue of their foundry business. That's a business with a
slightly higher degree of lock in, although it suffers from the need to
make constant huge investments to keep it competitive. IBM feels they need
leading edge chip technology in order for them to stay competitive in the
high margin server, mainframe and supercomputer businesses. They share
their costs with AMD to make it possible for them to retain competitive
FAB capability. If they ever decide that their system businesses don't
need captive FAB capabilities anymore they'll sell off the foundry
business just like the sold off the disk drive business.

 

[ASAAR]

On Sun, 28 Jan 2007 17:36:39 -0500, General Schvantzkoph wrote:

I agree with most or all of what you said in your reply, but . . .

That's a business with a
slightly higher degree of lock in, although it suffers from the need to
make constant huge investments to keep it competitive. IBM feels they need
leading edge chip technology in order for them to stay competitive in the
high margin server, mainframe and supercomputer businesses. They share
their costs with AMD to make it possible for them to retain competitive
FAB capability. If they ever decide that their system businesses don't
need captive FAB capabilities anymore they'll sell off the foundry
business just like the sold off the disk drive business.

AMD isn't in it solely to help IBM with their server, mainframe
and supercomputer business. They have their own business supplying
CPUs for laptops, desktops and lower end servers, so if IBM really
was getting out of the CPU business as you initially said, with AMD
"hemorrhaging money", that would probably be a fatal blow to AMD and
I doubt that IBM would want that to happen. AMD might even be worth
something to IBM even if it only keeps Intel distracted.

 

[tanstafl]

On Sun, 28 Jan 2007 17:36:39 -0500, General Schvantzkoph wrote:

I agree with most or all of what you said in your reply, but . . .


AMD isn't in it solely to help IBM with their server, mainframe
and supercomputer business. They have their own business supplying
CPUs for laptops, desktops and lower end servers, so if IBM really
was getting out of the CPU business as you initially said, with AMD
"hemorrhaging money", that would probably be a fatal blow to AMD and
I doubt that IBM would want that to happen. AMD might even be worth
something to IBM even if it only keeps Intel distracted.

I doubt that an AMD acquisition is likely - but a substantial equity
investment might make a lot of sense. A healthy AMD is in IBM's
strategic interest as a customer, supplier and competitive
counterweight to Intel. I suspect that Intel wouldn't object too
strenuously either - a sick failing AMD would unleash a torrent of US
& Euro antitrust woes, they NEED AMD as a legal shield.

As a precedent, recall that IBM did exactly that in the early 80s for
Intel. They were fairly small and extremely hard pressed for capital
to meet the burgeoning PC market demand. IBM invested $300M to enable
them to build fabs to meet the demand. They also took out a license
to make x86 chips (thru the 486 I believe) that provided an additional
substantial revenue stream. When Intel became financially robust, IBM
returned the treasury stock - on good terms, but at a tidy profit

$300M at that time could leverage the construction of 2 or 3 fabs.
Now it might take $2B to get a 45nm fab cranking. No sense building
it until the technical design and production engineering work is well
established - ergo (maybe) the current R&D cooperation. Seems like
the time is drawing nigh. Given AMD's current lack of favor on the
Street, another nice equity profit might be on their minds in Armonk.

 

[ASAAR]

As a precedent, recall that IBM did exactly that in the early 80s for
Intel. They were fairly small and extremely hard pressed for capital
to meet the burgeoning PC market demand. IBM invested $300M to enable
them to build fabs to meet the demand. They also took out a license
to make x86 chips (thru the 486 I believe) that provided an additional
substantial revenue stream. When Intel became financially robust, IBM
returned the treasury stock - on good terms, but at a tidy profit

That's probably what led to the production of what became some 486
chips in very small packages with a narrow 16-bit data path. Not
high performance but cost effective. I bought a couple of
replacement motherboards that used them, about the time Intel
introduced their hot running 60 and 66mhz Pentiums. I'm not sure of
the actual name that IBM used for their CPUs but if it wasn't Blue
Lightning it was something like that. The only thing I'm sure of is
that it included the word "Blue", and for obvious reasons.

 

[Wes Newell]

That's probably what led to the production of what became some 486
chips in very small packages with a narrow 16-bit data path. Not high
performance but cost effective. I bought a couple of replacement
motherboards that used them, about the time Intel introduced their hot
running 60 and 66mhz Pentiums. I'm not sure of the actual name that IBM
used for their CPUs but if it wasn't Blue Lightning it was something like
that. The only thing I'm sure of is that it included the word "Blue", and
for obvious reasons.

IBM 486SLC and 486SLC2 (not to be confused with the Cyrix 486SLC which was
totally different with a 32bit data bus and ran in a 386 socket). Blue
Lightning was the name of the IBM BL-75 MB. Either way you looked at it
the IBM CPU sucked. It had a larger 16K cache which gave benchmark
appearances of being as fast as a regular 486, but once you had to go
outside the cache, well basically it was a 386SX in a 486 package.

 

[Wes Newell]

IBM 486SLC and 486SLC2 (not to be confused with the Cyrix 486SLC which was
totally different with a 32bit data bus and ran in a 386 socket). Blue
Lightning was the name of the IBM BL-75 MB. Either way you looked at it
the IBM CPU sucked. It had a larger 16K cache which gave benchmark
appearances of being as fast as a regular 486, but once you had to go
outside the cache, well basically it was a 386SX in a 486 package.

Disregard the Cyrix SLC comment, I was thinking of the 486DLC.

 

[ASAAR]

IBM 486SLC and 486SLC2 (not to be confused with the Cyrix 486SLC which was
totally different with a 32bit data bus and ran in a 386 socket). Blue
Lightning was the name of the IBM BL-75 MB. Either way you looked at it
the IBM CPU sucked. It had a larger 16K cache which gave benchmark
appearances of being as fast as a regular 486, but once you had to go
outside the cache, well basically it was a 386SX in a 486 package.

As I said, not high performance. If that's what was wanted I
suppose they did suck, but they had several advantages for the
business users whose machines were upgraded. Performance that
couldn't be used would be wasted potential. These users were not
running monstrous memory hog apps. Most of their work was with
spreadsheets and documents. Mostly Symphony spreadsheets (a DOS
app., as you probably know), the remainder small Excel spreadsheets.
For the word processing, again, a DOS app, WordPerfect. Some of
them used underpowered IBM laptops (Thinkpad 701 "Butterfly" with
486DX2/50 cpus) and had no desire to run anything faster. For them,
small size and light weight were far more important than high
performance. I realize that most of the people in this newsgroup
prefer high performace computers. Had the upgraded desktop machines
been replaced instead with new Pentium boxes (with a very hot
running P60 or P66) they wouldn't have been able to work any
quicker, and their computer's CPU would have had Intel's infamous
Floating Point Bug. And yes, I did test most of the machines with
several small benchmark programs and on those the Blue Lightnings
did perform very well. But I knew, as you did, that these
benchmarks could be quite deceptive. <g>

 

[hizark21]

No the Core 2 Duo is a 32 bit core with 64 bit extensions EM64T.

 

[hizark21]

No the Core 2 Duo is a 32 bit core with 64 bit extensions EM64T.

 

[hizark21]

No the Core 2 Duo is a 32 bit core with 64 bit extensions EM64T.