Report claims AMD has hired a bank to look at selling assets, such as its patent portfolio

Reuters on Tuesday created a stir in the semiconductor side of the New York Stock Exchange when it published a report citing three sources as saying that Advanced Micro Devices, Inc. (AMD), the world's second largest graphics processing unit and x86 chipmaker, hired JPMorgan Chase & Comp. (JPM) to "explore options" including "a sale".

I. Will AMD Sell Its Patents? Reuters' "Sources" Say it Might

The publication cited AMD's struggles to achieve mobile market share as a key driver of the probe.  An unwillingness to pursue mobile options is viewed as a key factor behind AMD's decision to force Dirk Meyer out of the company's chief executive spot in Jan. 2011.

But Reuters did clarify that its sources suggested AMD may merely look to sell a significant part of its patent portfolio and that a sale of the entire company was unlikely.

JPMorgan refused to comment on the rumor. But an AMD spokesperson Drew Prairie directly denied it, stating, "[AMD is] not actively pursuing a sale of the company or significant assets at this time.  AMD's board and management believe that the strategy the company is currently pursuing to drive long-term growth by leveraging AMD's highly-differentiated technology assets is the right approach to enhance shareholder value."

AMD sign
AMD vigorously denies rumors that it is pursuing a sale. [Image Source: AP]

That's a pretty direct denial, although the adjective "actively" could give AMD some wiggle room if it is informally probing such possibilities in secret.

AMD has posted three losses in the last year -- $157M USD (Q3 2012), $590M USD (Q1 2012), and $177M USD (Q4 2011).  AMD did post a small profit in Q2 2012 -- $37M USD.

II. Change is in Store for AMD, One Way or Another

News of a potential sale of some of AMD's assets is not the only surprising news to emerge regarding AMD in recent weeks.  The chipmaker announced two weeks ago that in 2014 it would be releasing 64-bit Opteron server chips, and potentially consumer chips based on ARM Holdings plc's (LON:ARM) proprietary reduced instruction set computer (RISC) architecture, a rival to x86.

The switch to ARM's Cortex-A5x series intellectual property (IP) cores could save AMD on engineering overhead.  Versus the company's current monolithic complex instruction set computer (CISC) x86 cores, which are designed entirely in house, AMD's will only have to tweak, improve, and otherwise performance tune the IP-cores from ARM.

AMD has not announced plans to discontinue development of monolithic x86 cores, but given the high costs and AMD's continual struggles with profit, it would not be surprising to see AMD make that move once it jumps on the ARM train.  For now, AMD's greatest market success is leveraging its GPU product in CPU+GPU "accelerated processing units" (APUs), which have been scoring many laptop design wins.

The chipmaker is also gaining ground on rival Intel Corp. (INTC) in the server market.  While Intel's products do win on lightly threaded loads, AMD's latest Piledriver (Opteron 6400 series) cores beat out Intel's offerings in heavily threaded loads.  When you factor in AMD's cheaper prices, the company's server line is appearing very attractive to large clients; particularly those who actively run virtualized data centers or perform parallel computing.

AMD server
Despite losses, AMD is gaining ground in the server market. [Image Source: Reuters]

The world's most powerful computer is indeed powered by AMD's Opteron 6200 Series chips.

Source: Reuters

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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