Intel Likely To Close Deal With AMD

Due to AMD bright future prospects, Intel is trying to have partnership with AMD.

Intel Corporation and Advanced Micro Devices Inc. have been carrying out the discussions in order to consider the licensing of the latter’s GPU patents. After the news of the probable licensing agreement of AMD with Intel hit the surface, the stock of AMD went up by 5%.

Currently, Intel has a cross-licensing arrangement with NVIDIA Corporation – who is AMD’s chief rival. The deal was closed around six years ago and under the arrangement, the chipmaker had won the permission of incorporating NVIDIA’s IP into the GPUs, which Intel installed in its own CPUs. In the exchange of the aforementioned arrangement, NVIDIA would add around $66 million quarterly revenue.

The Santa Clara based chipmaker’s deal with the tech company will be expired next year. The former’s search for other options seems prudent. If Intel could win a deal with AMD, then it will be able to have adequate savings in terms of licensing fees. In the current year, AMD is likely to launch Polaris graphics-processing chip by June. Through the prospective deal with AMD, Intel can boost its graphical technology capacity. In January, at the Consumer Electronics Show, Polaris validated around twice the performance per watt as compared to the GPUs predecessors.

Through Polaris chip, AMD can regain the substantive portion of market share, which it has earlier lost, according to investment firm Nomura research note. This is the reason for the company to look forward to grab the opportunity of capitalizing on AMD’s bright outlooks. During the Christmas season, it is planning to release the Zen CPU.

Analysts at Nomura believe that this initiative of the tech company can help it to win significant chunk of market share in the server market, which otherwise has the dominance of Intel Corporation. The Japanese financial services group, Nomura, projected that AMD’s Zen can be an instant hit in the server market as the consumers, for quite some time now, have been on the watch for Intel’s alternative. It can form an alliance with smaller rival in this regard.

After making announcement of glowing futuristic prospects, for instance, the upcoming strong product launches, AMD stock gained moderate momentum. Last month, the stock went up by 44%. It is also desires to hold the Virtual Reality space strongly. On Monday, the Sunnyvale headquartered firm disclosed that its processors have powered an “overwhelming majority” of home VR system.

The said statement uplifted the stock by 8%. The tech organization has estimated that it has around 83% share of the VR market. If Intel could enter in a licensing agreement with AMD, the American chipmaker can also strengthen its existence in the growing VR space.