Is AMD vulnerable to takeover?

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There is little question that somewhere, amongst all the red ink on the balance sheet, AMD is a tasty potential target for a big firm with an itchy cheque book.

It's the number two-ranked processor maker in the world, the number two graphics card technology maker, a business with fingers in umpteen pies and with a considerable amount of real estate on the books. There's plenty there that appeals and which can be monetised even more than it already is.

However, it's also losing. Losing money, losing market share, and losing confidence. Right here right now, there's little clear indication of how it is going to effectively re-seize the initiative.

Looking back to the start of 2006, AMD was the processor maker of choice for many in the server market, and for home enthusiasts. Its Opteron and Athlon 64 processor lines had won AMD significant business at two ends of the market, and there was a real brand affection for a firm seemingly focused on delivering better and cheaper products than Intel, its main rival.

Changes

Much has changed since then. First and foremost, Intel hit paydirt in some style with its Conroe processor technology, in a matter of months wiping away AMD's work of many years in the home sector thanks to cost-efficient, overclocking-friendly and top performing Core 2 Duo and Quad processors. All of a sudden, AMD is trying to play catch up, but not quickly enough. While it is in the process of moving its processor line to 65nm technology, and readying its native quad core processor products, Intel is issuing announcements about its 45nm Penryn technology. Now appreciating that Intel's is widely perceived to be a paper announcement right now, with volume not likely until the middle of next year, it's still a tangible spoiler tactic at a point when AMD need the playing field as much to themselves as possible.

AMD's Barcelona technology, which is being rolled into the Phenom line of processor products (expected to debut in the server space), is one of a couple of product lines it's banking heavily on. With even the more evangelical analysts questioning AMD's ability to get the technology out in quantity before Intel presses home its advantage, not helped by continual rumours of further delays to Barcelona and Phenom, there's a tough fight ahead.

The merged beast

Add into the equation the ATI merger, first announced last summer. This hasn't, it's fair to say, been the smoothest of rides, draining the AMD coffers at a point where it needed far more on its side to take the fight to its rivals. On paper, there's real logic to the merger itself, and the long term benefits - assuming the bank account doesn't empty first - are real and obvious.

ATI is a major - and clever - player in the graphics market. And while it's been usurped by NVidia of late at the performance end, ATI has wisely made sure their graphics technology isn't just PC reliant - you'll find it in games consoles, portable devices, set-top boxes and far more besides. Just the kind of market AMD could do with pushing into with its processor line.

Secondly, there are some manufacturing and design crossovers, in addition to the economies between the graphics and processor markets. When you include the design and manufacture of motherboard chipset technologies too, then a united AMD/ATI has a major stack of chips at the table, come what may.

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