AMD the subject of takeover rumors by Chinese firm

Any deal would be very complicated due to licensing and IP ownership.

AMD started the week as the subject of takeover rumors by a Chinese firm, but others caution that any deal would be extremely difficult at best. The report first appeared on the Chinese news site International Online, which said that the Chinese firm BLX IC Design was interested in acquiring the struggling firm.

China's Institute of Computing Technology, Academy of Sciences and Jiangsu Zhongyi Group established BLX in 2002 and the company is one of the leading fabless microprocessor design companies in China. Its flagship semiconductor is the Godson ship, a MIPS-like processor for embedded devices.

BLX and AMD are not strangers. The two opened the AMD/BLX Computing Client Development Center in Beijing in December 2013. Products designed by the two were aimed at thing client computing solutions in the China region.

AMD has had it rough lately. It fell short of earnings projections and its guidance was not good. Both CPU and GPU sales were down and it has been losing ground to Intel and Nvidia. It recently appointed a new CEO and several senior executives have left.

However, such a deal would face quite a few hurdles. The site featured some really good points from Bernstein analyst Stacy A. Rasgon, who did not think that "Lisa Su’s first task as CEO would be to sell the company."

Rasgon also noted that Intel's x86 cross-license IP deal with AMD "does not transfer under a change of control," so BLX would have to renegotiate a new license with Intel. Given the Chinese government pretty much owns BLX, that would probably not go over very well with Intel or the U.S. government.

And AMD is hardly a sovereign company these days. The Mubadala Development Company of Abu Dhabi is the largest stakeholder in AMD, with 18.3% of company shares. So in addition to dealing with the U.S. government and Intel, BLX will have to work things out with Abu Dhabi. If it does pursue the deal, BLX will have a lot of work to do.

I agree with Rasgon that Su didn't become CEO to sell the company. Rory Read might have done it after failing to turn the company around, but Su is a respected veteran at the company and she has stated a plan to rebuild the company around a new strategy. But she also wouldn't turn down a good offer, either.

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