AMD expands low-power chip technology licensing deal

By Noel Randewich

SAN FRANCISCO, May 5 (Reuters) - Chipmaker Advanced Micro Devices has expanded its licensing technology agreement with Britain's ARM Holdings (LSE: ARM.L - news) as the U.S. company seeks growth outside the slowing personal computer industry.

AMD (NYSE: AMD - news) said on Monday it has acquired an architectural license from ARM, the Cambridge (SES: E1:J91U.SI - news) , England-based company. ARM's low-power technology is widely used in smartphones and tablets and is also behind an upcoming crop of energy-efficient server chips.

The new license provides more room for AMD to customize its chip architecture and differentiate its products from others based on ARM technology.

The Sunnyvale, California, company is planning this year to launch low-power server chips based on ARM technology to compete in data centers against Intel Corp's high-end Xeon processors. Those chips will use off-the-shelf technology licensed from ARM in a previous agreement.

"We're well on our way to developing our own ARM cores," AMD (Shenzhen: 002623.SZ - news) Senior Vice President Lisa Su said at a news conference.

With PC shipments falling for eight straight quarters as consumers shift toward tablets and smartphones, AMD aims to get half of its revenue from new, fast-growing businesses such as game consoles and microservers by the end of 2015.

AMD also plans to expand further into making chips for other markets, including industrial equipment and medical devices.

At the event on Monday, executives repeatedly described AMD as unique in its ability to create chips using technology combining ARM and x86, the personal computer architecture it has historically used to compete against Intel Corp.

Proponents of microservers, which have yet to be widely implemented in data centers, say that servers built with several low-power chips can be less expensive to buy and manage than servers built with Intel (Berlin: INL.BE - news) 's high-powered chips.

AMD is also supplying processors for Microsoft Corp and Sony Corp's latest game consoles.

Strong Playstation 4 sales helped AMD beat expectations in the March quarter but the company has yet to convince investors it can transform its business. Twenty-one analysts tracked by Thomson Reuters (Frankfurt: TOC.F - news) rate AMD's stock as neutral or negative, while just six recommend buying it. (Reporting by Noel Randewich; Editing by Richard Chang)