As part of its earnings release today, it was announced that AMD has partnered with a combination of public and private Chinese companies to license its high-end server architecture and products. The Chinese company is called THATIC, Tianjin Haiguang Advanced Technology Investment Co. Ltd., and it will license x86 designs and SoC technology providing all the tools needed to make a server platform including CPUs, interconnects and controllers.
This move is important and intriguing in several ways. First, for AMD, this could be a step to get the company and its products some traction and growth after falling well behind Intel's Xeon platforms in the server space. Increasing the market share of AMD technology, in nearly any capacity, is a move the company needs to have any chance to return to profitability. For the Chinese government, it finally will get access to the x86 architecture, though not in the form of its own license.
By licensing the x86 designs to THATIC, AMD could create an entire host of competitors for itself as well as for Intel, which won't help Intel's in-roads into the Chinese markets for enterprise tech. Intel does not license out x86 technology at all, deciding instead to keep it completely in-house in hopes of being the single provider of processors for devices from the cloud to the smartphone.
The first products built by THATIC will likely use the upcoming Zen architecture, due out in early 2017. AMD creates an interesting space for itself with this partnership – the company will sell its own Zen-based chips that could compete with the custom designs the Chinese organization builds. It's possible that a non-compete of sales based on region is part of the arrangement.
Out of the gate, AMD expects to make $293 million from the deal as part of the joint-venture and also will make money based on royalties. That's great news for a company just posted another net loss for Q1 2016.