AMD Aims to Compete

This acronym-heavy analysis has Advanced Micro Devices (NYSE:AMD) as the centerpiece of a unique perspective on consolidation; announcements at the AMD Fusion Development Summit (AFDS) reveal an unexpected approach to tackling a very dominant Intel Corporation (NASDAQ: INTC). This approach could be summarized as the Heterogeneous System Architecture Foundation (or, if you also struggle to spell heterogeneous without spell-check, the HSA Foundation). The HSA Foundation is a non-profit consortium designed to provide a simpler standards-based architecture to heterogeneous computing, allowing programmers to derive more value from a consistently evolving processing system. That wasn’t the extent of ADM’s announcement at the summit, as the semiconductor company also stated they will be licensing a mobile phone microprocessor design from ARM. ARM is also now a member of the HSA Foundation consortium. It is probably safe to say Intel has made a few updates to their long-term competitive analysis.

AMD’s New Licenses

This is the first time AMD has licensed from ARM, and the extent of the cooperation is focused upon security. In 2004 ARM developed security extensions called TrustZone Technology, a security technology that functions across advanced computing platforms. TrustZone technology essentially prevents information from being leaked through enabling the application core to switch between a trusted closed network and a broader public one. This two-core system allows for a more protective inner system for applications like cloud-based date, online payments and banking, software license management (protecting digital rights), and anti-malware.

From the onset of this partnership, ARM security applications will operate within AMD’s x86 CPU and GPU chipsets. AMD noted that they also intend to incorporate ARM Cortex-A5 in 2013 and 2014 in select applications. Like all processors, the Cortex-A5 is branded as capable of high-level operating system management at a lower energy profile, highlighting the constant trade-off between power and performance in the semiconductor industry. The capacity to incorporate ARM’s advanced security technology and powerful Cortex-A5 processor is of high value in regards to technology growth for AMD, certainly increasing their competitive capacity relative to Intel. This is also not yet to include the HSA Foundation advantages, which may provide AMD a more sustainable long-term technological growth strategy.

The HSA Foundation: Implications

Although the HSA Foundation is a broader and more complex piece of news than the licensing agreement above, ARM’s recent inclusion raises the visibility of this non-profit significantly. With something of a philanthropic mission to deliver developers with one architectural outline, HSA allows for a simplified environment in which to develop new software for the heterogeneous processor market. This initiative would potentially allow for increased levels of innovation in software development as more minds have access to a more standardized and consistent system, applying to a spectrum of functionalities in cloud computing, security, power management, and just general higher performance. The HSA has an impressive array of initial founders in addition to AMD and ARM, including Mediatek, Texas Instruments, and Imagination Technologies.

Applying this unique approach of technological consolidation to AMD in particular likely rests largely within the realm of competition. Simply put, AMD would benefit enormously from a new standard that could compete with INTC’s dominant computing processor x86. The involvement of other major players such as Qualcomm or Nvidia would greatly increase the potential of the HSA Foundation, but ARM’s involvement is still a sizable step in the right direction. From AMD’s perspective, generating a new heterogeneous standard might potentially loosen up INTC’s firm grip on that particular segment.

Bottom Line

What do the newly created HSA Foundation and ARM licensing deal have in common? They both allow AMD to compete more effectively against INTC. This common denominator sets the tone for AMD’s strategic focus right now as they aspire to unseat INTC as the industry leading processor provider. AMD, when compared with INTC, often lacks technologically in power efficiency and overheating issues without any substantial advantage in performance. New licenses from ARM, along with long-term technological developments through the HSA Foundation initiatives, are AMD’s attempts at consolidating to develop the tech tools to one-up a very formidable rival.