AMD Advanced Processing Units (APU’s – no relation to the Simpsons Apu) can be found in a plethora of devices, ranging from most of the last generation AND all current generation home consoles, as well as providing chips in desktops, laptops, high-end server hardware and high-end graphics cards. Even though they have a monopoly on providing chips for the current consoles we know and love and are one of the two main players in the high end PC graphics cards market, they have struggled with profitability in recent years.
In an effort to boost its own chip design team and to improve cost efficiency, Microsoft are looking to buy the company in order to secure AMD’s System-On-Chip architecture, most likely for its future hardware possibly including Windows Phones, Surfaces and future Xbox’s. Since AMD are unlikely to sell the APU segment, a part of the company on which much of the rest of the company remains dependent, it is highly likely that they may consider making a deal and going the whole hog with Microsoft. When you consider that Microsoft has an average of about $96 Billion in cash and AMD’s market cap is sitting under $2 Billion, Microsoft could eat them for breakfast.
This could benefit Microsoft a number of ways in the short term and at the very least with Microsoft said to be spending in the region of $100 per APU within their Xbox One’s, they could save at close to $1 Billion a year, which sounds almost unfathomable, however, taking into consideration the bill of materials and overheads, it would be more closer to an average of $300 – $400 Million, which is still a huge chunk of change.
What would this mean for other players like Sony (PS4) and Nintendo (Wii U), the latter of whom has had relationships with ATI and AMD since the GameCube? I can’t imagine they’d be too happy at one day having to pay Microsoft to supply APU’s for their consoles. This could also have a knock-on effect with other competitors such as Nvidia and Intel, which may lead them to saddle up with competing brands (Apple, anyone?).
This is an interesting turn of events which we will follow closely and with high anticipation here at Geek Power. Also if this doesn’t work out, the next most likely company to buy AMD out appears to be…Samsung! Can you imagine an AMD processor in the next Galaxy S7? No, me neither.