AMD Goes Lean To Compete With Intel

Broadcom Corporation, a $3.8 billion fabless semiconductor company, is all set to acquire the digital TV (DTV) business of AMD, one of the world's largest chip makers with $6 billion revenue in 2007, for $192.8 million. With this acquisition, AMD aims to focus entirely on its primary market of PC processors, to compete with its largest rival Intel.

As AMD is going through tough times this year, the company's shares have fallen 20.9 per cent in the microprocessor market. In July, AMD lost $1.9 billion during the second quarter and also appointed its new CEO Dirk Meyer, replacing Hector Ruiz.
"AMD is executing a strategic plan to transform the company, becoming leaner and more focussed while seeking to create a business model to deliver sustainable profitability," said Dirk Meyer, president and chief executive officer, AMD. "The sale of our DTV business is a key step in AMD's transformation, helping to strengthen our balance sheet, lower our breakeven point, and hone our focus in order to take full advantage of our position as a leader in both microprocessors and graphics technology."
With this acquisition, approximately 530 members of AMD's dedicated DTV team, in addition to certain employees directly supporting this team, located in six primary design centres around the world, will be invited to join Broadcom.
"The acquisition of AMD's DTV business, which will become the core of Broadcom's DTV line of business, will enable us to significantly scale and accelerate the completion of our digital TV product portfolio while also expanding our tier one customer base and positions us to achieve leadership and long-term growth in this important market segment," said Daniel Marotta, senior vice president and general manager, broadband communications group, Broadcom.
The closing is targeted to occur during Broadcom's fourth quarter ending 31 December 2008.