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This is why Intel picking up AMD might make sense

by on03 May 2013

AMD up 27.24 percent on acquisition rumour

A few years ago it would have been impossible for Intel to acquire AMD, simply due to regulatory constraints put in place by the FTC and the European Union. Intel had more than a 60 percent of the PC and notebook market, so picking up AMD, a company that has some 20 percent of the market, would make Intel a real monopoly. 

In the last two years the iPad, smartphones and ARM based tablets have changed the landscape, eating up Intel's revenue and market share. It is true that most people, especially professionals and the business crowd, use x86 processors, but this is rapidly changing as home users are happy with emailing, browsing and playing some games on their iPad or other tablets. This puts Intel in a world trouble, as the PC market nosedived by 14 percent last quarter, due to a lack of interest for new devices and upgrade.

Tablets are becoming couch browsing devices, people use their smartphones to read news on the go and sometimes at home. More and more users don’t even touch their notebooks or desktops at home. With ARM staying the dominant instruction set in the phone and tablet space, Intel is facing a serious issue as Apple, Samsung, Qualcomm and Nvidia are all making money on ARM chips.

With this in mind, this would be the main reason for Intel to pick up AMD. AMD would not cost them that much, as Intel still has billions in bank, but with AMD, Intel would gain great graphics, something that the company has been struggling to crack for many years. It would make Intel slightly more competitive, but it would not solve all of its problems.

ARM manufacturers also face challenges, they need to produce more powerful chips and deliver a better user experience in order to win more notebooks and detachable devices, but this is going well with non-Apple based tablets. Apple uses ARM, so in the tablet world ARM is winning this fight, but Qualcomm and Nvidia as two independent chip manufactures could do a much better job at getting popular design wins. The Snapdragon S800 and Tegra 4 will get these two companies a step closer, while Apple will continue making good chips for iPads and iPhones. Let’s not forget about Samsung, as it makes many chips for its phones and tablets.

AMD gained 14 percent on May 1st, and an additional 5.9 percent yesterday, getting its stocks up to $3.41. Back on April 30th, AMD stock was trading at $2.68. In last three days of trading AMD gained 27.24 percent or $0.73 per share, which is a huge leap for a company with a 52-week low of just $1.81

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