AMD Expands Server Customer Base, Buys Its Own Server OEM

AMD's CEO, Rory Read, has made no secret of his plans to take the company in new and different directions, but the company's server announcement today caught the market by surprise. Sunnyvale has purchased SeaMicro in a deal worth ~$330 million, the majority of which ($281M) will be paid in cash. The acquisition brings AMD's onetime CTO, Fred Weber, at least temporarily back to the fold; Weber left AMD to take a position with SeaMicro.

If you aren't familiar with the company, SeaMicro is a server startup that made a name for itself starting several years ago when it built server rigs using Atom processors. The company has extended and built on that foundation since its inception and ironically announced several major Xeon distribution deals with Intel just last month. AMD has announced that it intends to satisfy all existing customer obligations and to operate the business in a normal fashion going forward.

Such statements are bound to raise a few eyebrows. Microprocessor design firms rarely buy OEMs; design firms that buy OEMs and continue to distribute their competitors' products are rarer than hens' teeth. So why buy SeaMicro in the first place?


SeaMicro's custom ASIC allows it to pack chips much more tightly than would otherwise be possible.

AMD is after what SeaMicro calls its Freedom Fabric ASIC (Application-Specific Integrated Circuit). Fabric, in this context, refers to the communication circuits that tie server processors together, but SeaMicro claims that its Freedom Fabric is capable of much more than most other chips. The ASIC is compatible with multiple instruction sets and is capable of virtualizing an entire product stack; SeaMicro claims the only components it needs on a motherboard are the ASIC itself, the CPU, and DRAM. "Cloud computing has brought a sea change to the data center -- dramatically altering the economics of compute by changing the workload and optimal characteristics of a server," said Andrew Feldman, SeaMicro CEO, who will become general manager of AMD's newly created Data Center Server Solutions business. "SeaMicro was founded to dramatically reduce the power consumed by servers, while increasing compute density and bandwidth. By becoming a part of AMD, we will have access to new markets, resources, technology, and scale that will provide us with the opportunity to work tightly with our OEM partners as we fundamentally change the server market."

AMD refused to comment on whether it would be launching any Brazos-class hardware to replace SeaMicro's current Atom solutions, saying only that it intended to debut Opteron chips this year. We're betting that the company will wait for 28nm before it makes a move on Brazos; it's too late in the lifetime of the 40nm solutions for it to make much sense designing a major server solution around them.

Jumping for SeaMicro's fabric technology builds on AMD's rhetoric concerning the importance of device/product-level integration and may help the company offset Bulldozer's higher power use by using less power on the platform level as well as offering solutions at densities Intel's products don't match. The impact on SeaMicro's business remains to be seen -- in theory, customers should see no change in their product support or system availability, but it wouldn't surprise us if Intel was a bit less enthusiastic about working with the company to design custom solutions from this point forward. As to whether SM's Freedom Fabric is the tech Opteron needs to regain lost territory, we'd need to see more data on what Freedom Fabric can do in supercomputing scenarios. At the very least, it's a novel move -- and it gives AMD a direct channel to customers that it's never had before.