Why Apple Should NOT Buy AMD

I recently read a posting over at Seeking Alpha regarding the ‘positives’ of Apple picking up AMD. Not only is there minimal-to-no realistic financial analysis, the author clearly doesn’t understand technology and the state of the CPU/chipset/graphics market. I’m not one to typically tear apart a post like this, but this one was so ridiculous, it deserved special attention.

1. Apple’s best computer system architecture, operation system, user interface, and applications will combine with AMD’s most advanced and genuine multi-core CPUs and energy saving technology;

And yet all that ‘advanced and genuine multi-core’ CPU can’t seem to compare to even Intel’s lowest end quad-core, the Q6600, both in terms of performance or energy-efficiency. Intel may have taken the less elegant route, by combining two separate die on one package, yet it performs quite well and is even more energy-efficient than AMD’s recently announced Phenom. Shocking isn’t it?

2. Apple will have better integration for its computer, particularly considering the new AMD Spider chip that combines AMD-ATI CPU and graphics in one chip;

I’m not sure where the author got the idea that AMD’s Spider is even a chip – it’s not. Spider is a platform combining a specific set of CPUs, chipsets and graphics cards. It’s sort of like Intel’s Centrino package. It doesn’t really offer anything you can’t get by mixing and matching hardware (although CrossFireX with multi-GPUs will required a 790FX board). It most certainly is not a single chip combining CPU and graphics. If anyone can offer hardware integration, it’s Intel – they’ve been doing it since Centrino.

3. With Apple’s unique position, it can still sell AMD’s CPUs and other chips to all AMD’s current customers and won’t compete directly with neither Apple’s nor AMD’s current customers after the acquisition;

What unique position? I’m sure Intel would love an Apple-AMD combination. Not mentioning the complete lack of facts backing this statement up, it also makes absolutely no logical sense.

4. Intel (INTC) will gain a more balanced competitor, which is healthy for the entire semiconductor industry, and even Intel may benefit from it;

This is definitely possible – if Apple already had a semiconductor division and AMD could add to it. Wait, but they don’t.

5. Apple’s solid financial condition not only can support but also will speed up technology innovation; further it may change the entire business and technology landscape – from the semiconductor industry, PC industry, enterprise IT industry, and consumer electronics industry, to wireless communication industry;

Microsoft has the capability to buy an oil-driller as well – but it does little to nothing for synergies. If Apple is tempted to get into the semiconductor business, they sure haven’t shown anything to point in that direction. How an Apple investment would change the IT industry is uncertain – it’s one thing to make new MP3 players – Apple has experience in that field – but adding a bunch of AMD engineers to an Apple campus doesn’t magically make them more innovative.

6. It reduces cost for Apple and improves its profit margin;

Did the author even consider why AMD is in its current state? Intel is a formidable competitor, one that Apple doesn’t compete with currently. Buying up AMD would mean Apple would be competing against Intel. If the CPU price wars of the past year and a bit shows anything, it’s that it does not help margins.

7. It is not technically difficult since Apple has already worked out with Intel CPU;

?????

8. It is cheap. AMD spent $5.4 billion alone to acquire graphics chip company ATI mostly by cash in June 2006;

A company does not acquire another on the basis of ‘cheapness’. The acquisition must add value to the business – if it does not, no amount of ‘cheap’-ness is enough.

9. The government will be glad and the deal won’t face challenge by government regulation of monopoly and competition policy;

By this logic, a company should acquire companies not within their competitive scope in order to make the government happy. Oh, how simple it all is to get on the government’s good side. Microsoft – time to start acquiring car makers.

10. It will keep AMD American.

Oh, because that’s a big concern for Apple. I’m not even going to go into the protectionist mindset that is required to come up with this sort of argument.

I know the article in question is just a speculative opinion article, but at least back up the arguments with some facts. The points posted in that article were just a bunch of nonsense.

7 thoughts on “Why Apple Should NOT Buy AMD”

  1. the guy who left the arguments is from Intel, the first argument he points out that Nothing can compare Intel’s lowest end Quad core chips is a false statement. please keep ur ass kissing else where.

  2. While I’d love to work for a company such as Intel, I’m not currently in that position, so I’m not certain where you got that idea from.

    Feel free to back up your argument kevin – I’ve already linked a couple articles that support my point and have plenty others if you’d like to read some more.

  3. I generally agree with your post. Even buying companies that are technically a fit is definitely not a guarantee of success. Years ago, HP bought a company called Apollo Computers around 1989 which vaulted them into first place in the Unix workstation market for about 1 quarter when Sun retook the lead. It just didn’t work out that well and HP knew the workstation market at the time. They would have been better off hiring Linus Torvalds. Or, if you want another example, look at Mercedes buying Chrysler. Another failed acquisition. Its probably easier to find failures than successes.

    Maybe HP-Compaq is a success story. HP’s certainly doing OK now but hard to tell what Compaq had to do with it. Maybe they are succeeding in spite of Compaq.

    Maybe I’m a cynic.

  4. I’m sorry but this just seems stupid to me. Nvidia buying AMD? that is feasible, but apple would want to have the AMD chips start looking pretty rather than be useful.

  5. I’d say if it can be attributed to any one thing, the reason HP turned it around is because of Mark Hurd. He really tightened the belt and pushed all the divisions. Seems to have paid off mightily.

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