AMD Acquires Server Maker (AMD, INTC, ARMH)

Chipmaker Advanced Micro Devices Inc. (NYSE: AMD) has acquired server maker SeaMicro Inc. for an undisclosed amount, according to a report in The Wall Street Journal. SeaMicro makes a low-power servers based on the Atom designs from Intel Corp. (NASDAQ: INTC).

That’s right, AMD just bought a company that builds servers using Intel chips. Both companies have been trying to compete with low-power servers based on chips from ARM Holdings plc (NASDAQ: ARMH). The so-called “micro-servers” cost less than standard servers, use less power, and can be installed essentially anywhere.

What does new AMD CEO Rory Read plan to do with SeaMicro and the company’s established relationship with Intel? Can AMD be planning to let SeaMicro continue to sell servers with Intel chips? Doesn’t seem likely in the long-run, but for the time being AMD may have no choice. Of course, Intel might have something to say about that too.

AMD recently said that it was open to implementing different chip architectures if that’s what a customer wants. Most observers thought AMD was talking about tablet or other mobile processors. That’s not what today’s story is about though.