Advanced Micro Devices Inc (AMD) shares soared as much as 26 percent in early trading yesterday after it sold its licensing technology to a Chinese, state-backed joint venture that is to produce server processors for the Chinese market.
The company also predicted strong growth in the current quarter. Second-quarter revenue is likely to increase 15 percent, plus or minus 3 percent, from the preceding three months, AMD said in a statement on Thursday.
That translates into sales of US$931.8 million to US$981.8 million and compares with analysts’ average estimate of US$890.8 million, according to data compiled by Bloomberg.
Chief executive officer Lisa Su (蘇姿豐) is trying to turn around the Sunnyvale, California-based company by seeking new markets for its graphics chips and processors and licensing the rights to technology it has already developed. It is part of her strategy to diversify AMD away from areas where it has struggled to compete against larger rivals Intel Corp and Nvidia Corp.
The company believes it clawed back some share in the first quarter in both product areas and projects greater demand for graphics and new orders for custom chips to propel growth in the second quarter, Su said at a conference call with analysts.
AMD will get US$293 million as part of the licensing agreement with Tianjin Haiguang Advanced Technology Investment Co (天津海光先進技術投資), a joint venture overseen on the Chinese side by the Chinese Academy of Sciences. The entity will get processor and system-on-chip technology and design server chips only for the Chinese market.
AMD said the agreement would not affect its efforts to resurrect its presence in the lucrative server market, where Intel has grabbed more than 99 percent share.
AMD’s first-quarter loss was US$109 million, or US$0.14 a share, compared with a loss of US$102 million, or US$0.13, a year earlier. Revenue fell 19 percent to US$832 million, failing to reach US$1 billion for a second quarter in a row.