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AMD will explore graphics IP licensing opportunities going forward

In a bid to boost its revenue streams, Advanced Micro Devices could start licensing its graphics processing technologies to third parties, just like ARM Holdings, Imagination Technologies, Nvidia Corp. and Vivante. But will that business make sense to AMD?

AMD and Nvidia Corp. are the last two remaining developers of discrete graphics processing units (GPUs) for personal computers. Since research and development of graphics processing technologies is getting more and more expensive, Nvidia Corp. last year decided to start licensing its GPU-related intellectual property to third parties, which naturally raised questions about similar plans at AMD. Although the company has not announced any intentions like that, it is actively exploring such opportunities.

“We have considered [technology licensing deals] and we will explore possibilities in that area as we move forward,” said Devinder Kumar, chief financial officer of AMD, at Raymond James’ systems, semiconductors, software and supply chain conference.

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At present AMD has several ways to monetize its graphics processing IP portfolio: by selling graphics processing units, by selling accelerated processing units and system-on-chips with integrated graphics cores, by selling semi-custom SoCs for various devices (such as video game consoles) and by licensing its technologies. The company uses all the opportunities it has, but its licensing business is limited to Nintendo Wii U and some other systems. Therefore, it is logical that the company would like to expand its licensing business.

While AMD has a very broad graphics IP portfolio, it should be noted that every technology licensing deal means a lost semi-custom SoC development deal, which means lost revenue and potentially lower profits. Still, AMD does not have to develop anything itself if it licenses technologies to other companies, moreover, the company cannot develop all the chips it is proposed to.

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KitGuru Says: While AMD could license certain technologies to third-party developers of mobile SoCs that it would not like to design itself (e.g., the company does not seem to be interested in application processors for smartphones and tablets), graphics IP licensing will unlikely become a big business for AMD since the competition on this market is very strong and AMD will have to compete against four rivals all of which have rather decent technologies.

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