reinharden

10 Reasons Why Apple Should Acquire AMD

You do remember AIM, don't you?

Partnering with the second tier silicon vendors at the time (IBM and Motorola) didn't really work out all that well. Why on earth would Apple want to partner with what is really the third or fourth tier silicon company?

Vertical integration doesn't work very well in the computer industry. IBM and Motorola have demonstrated that by their moves to abandon various parts of the market.


If AMD is going to survive in the long-term, it's best American hopes are private equity and/or IBM. Otherwise, it's likely going to land in the hands of one of the large Asian companies. Vertical integration *might* work for a company selling low cost PCs in China or India or possibly Korea. If that company already needed to build lots of fabs, there'd be some useful synergy.

But simply needing to buy 3% of the CPUs used *only* in the PC market does not provide sufficient synergy or scale to make it worthwhile to spend literally billions on each generation of fab.

Apple's unit run rate is currently 8 to 10 million units per year. You've got to build a new fab every 2 or 3 years to stay current. Each fab build costs more than the last but realistically you're looking at $3 to $5 billion.

For convenience, let's look at 2 years at 8 million each and 2 fabs at $4 billion each. We've just spent $500/machine simply on building fabs!


The last thing AAPL wants to do is get back in the silicon business. Even they admitted that they're primarily a software company when they got with the program and started optimizing Intel reference designs instead of designing from scratch.

reinharden

Intel vs. Negroponte: Time For AMD’s Take

Weird that AMD thinks INTC is a monopoly considering that AMD still holds something a bit over 20% marketshare. That's at least a duopoly. But I guess that wouldn't have any chance of playing in the press...

reinharden