AMD Acquires SeaMicro to Battle Intel in Cloud Arena

Advanced Micro Devices (NYSE: AMD), the No. 2 maker of microprocessors, said it plans to acquire SeaMicro, a private developer of low-power microservers, for $334 million.

The acquisition, scheduled to close later this year, is a bid by the Sunnyvale, Calif. semiconductor developer to battle Intel as more companies divert services to the cloud, or Internet-based computing.

The move, one of the first by new AMD CEO Rory Read, also lets AMD acquire SeaMicro's technology without developing it in-house. Intel already has similar technology as do rivals Hewlett-Packard, the No. 1 computer services company, and Dell, the No. 2 PC maker that is broadening more into enterprise markets.

Read said AMD intends to integrate SeaMicro's technologies into its most advanced Opteron chips for servers by the third quarter.

The 80-member staff of SeaMicro, also in Sunnyvale, will join AMD. Current CEO Andrew Feldman will become general manager of AMD's new Data Center Server Solutions unit.

AMD will pay $281 million in cash, with the remainder in stock. AMD had nearly $2 billion in cash and investments on Dec.31.

SeaMicro, founded in 2007, developed chips that are more energy efficient than AMD's. Servers designed with them require only 25 percent of the power and take up only 16 percent of the space of a contemporary server.

Venture capitalists backed SeaMicro, which also won investments from the U.S. Department of Energy. The investors were Khosla Ventures, the vehicle of Sun Microsystems co-founder Vinod Khosla; Draper Fisher Jurvetson, on Silicon Valley's best-known firms and Crosslink Capital, whose prior investments include Carbonite, Equinix and Saba Software.

Shares of AMD closed up 22 cents at $7.57 in Thursday trading.