Question Could/should AMD buy a 25% stake in Intel, now that doing so would be cheap?

[GunsMadeAmericaFree]

I just read that intel stock has dropped by more than half since the start of the year, and the company is shedding 15% of its workforce in response to this and ongoing cpu issues. Currently, intel as a company is only worth about 41% of what AMD is.

That being said, it might seem that now could be the perfect time for AMD to spend just 10% of it's market cap to buy up about 25% of the outstanding shares of Intel. This would be a long term way for AMD to diversify, and also to increase long term revenue streams from corporate or government places that will only buy Intel.

I'm just not sure if AMD could successfully pull it off. What do you think?

 

[Tuna-Fish]

That being said, it might seem that now could be the perfect time for AMD to spend just 10% of it's market cap to buy up about 25% of the outstanding shares of Intel.

AMD cannot spend it's market cap unless they do some kind of an all-stock deal, which Intel or AMD stockholders are in no way obligated to accept. To buy a 25% stake in Intel they would have to come up with ~$24B cash, which would actually be a tall order for them.

 

[desrever]

Why would AMD want Intel stock? It's not like they are investing in a startup.

Not sure why you think owning shares would give revenue, especially when Intel suspended dividend.

 

[alcoholbob]

AMD is too small of a company to be risking catching a falling knife. You need a much bigger company, like Nvidia or Microsoft to step in to be able to just casually do an equity rescue of Intel. However, I doubt any of the MAG 7 have any interest in taking a multibillion dollar position in a company as badly run as Intel.

 

[Doug S]

The FTC would never allow it.

If someone was going to step in and invest in Intel, it would need to be someone with a lot of cash lying around, because exchanging shares of stock between AMD and Intel shareholders wouldn't help either company and AMD doesn't have nearly enough cash to make a difference there.

The two leading candidates I see if such a thing were to happen are Apple and Berkshire Hathaway. The latter has $200 billion cash at the moment, that's a lot of "dry powder" as Warren Buffett calls it! He famously never invested in a tech company until he bought Apple stock, and did it because he was able to understand their consumer market in a way that related to how he typically valued his investments because of their customer loyalty.

Intel isn't a consumer facing company like Apple, but he'd be able to understand their foundry business in terms of Intel being a US based foundry, with a built in market for geopolitical reasons (a "moat", in his terms) for defense and defense adjacent needs, and for any multinational that wants to diversify risk away from a island located next to a potentially hostile neighbor (which is, let's face it, all of them)

So maybe Tim Cook and Warren Buffett need to connect on a phone call, and see if they can agree whether it makes sense to propose some sort of joint investment. An investment in the Intel Foundry business only - it would be required to be fully split from Intel's other business lines within say one year of the date of the investment. Without needing to feed the massive capital appetite required to compete with TSMC, Intel the slimmed down x86 chip company can be like AMD was in the days they were struggling. Smaller, but more nimble and (potentially at least) better able to more quickly right the ship.

With Apple and Buffett money, Intel Foundry could build out the fabs, and Apple could commit to some major volume (if the process isn't as good as TSMC's, Apple could still use it for non-Pro iPhone SoCs and modems, which is still a crapton of wafers) to give it an anchor customer.

 

[GunsMadeAmericaFree]

Why would AMD want Intel stock? It's not like they are investing in a startup.

Not sure why you think owning shares would give revenue, especially when Intel suspended dividend.

Well, if a company turns things around and becomes profitable, doesn't the stock usually go back up? They could eventually double or triple their value, maybe during a cycle when AMD profits had had a downturn.

On the other hand, if they owned 25% of the company, maybe they could pressure Intel to finally make boards again where you can use either Intel OR AMD processors on the same board, like in the old days.....

 

[DavidC1]

Well, if a company turns things around and becomes profitable, doesn't the stock usually go back up? They could eventually double or triple their value, maybe during a cycle when AMD profits had had a downturn.

AMD during the bad times were a very small company and only made CPUs. Intel is different in that it'll highly likely result in a split at a time whether it's a toss up between foundry and the design team. Then it'll essentially become two companies that are a shadow of the previous and eventually fade into oblivion. Probably the semi-vultures are going to shred it for it's IP and throw the rest into the bin.

Right now they still have large PC marketshare so if the company itself implodes the stock will go substantially lower than it is today, because their marketshare will plummet. With $48 billion in debt there's a huge risk.

 

[DrMrLordX]

The price can always go lower. It's not yet time to consider parceling up Intel and feeding on its remains. Plus @Doug S is right: such an acquisition would have antitrust implications.

Also consider that Intel may suffer some serious liabilities soon. Nobody knows how bad that's gonna get.

 

[AnandThenMan]

Imagine time jumping back to 2009 and telling people one day AMD will be in a position to buy Intel but they won't because Intel the company is a sinking ship.

 

[ErichZannMusician]

With the likelihood of the upcoming regime change and impending isolationist phase of US in the geopolitical climate, the ideal candidate to prop up Intel's foundry business in NVIDIA.

They have the cash to do so.

 

[Abwx]

With the likelihood of the upcoming regime change and impending isolationist phase of US in the geopolitical climate, the ideal candidate to prop up Intel's foundry business in NVIDIA.

They have the cash to do so.

AMD wouldnt licence them X86-64, i thought that it was clear for everyone, Intel and AMD have cross licencing agreements that would be nullified should one of the two be bought by any third party, Nvidia could buy Intel but then they could only release 32 bits CPUs.

 

[ErichZannMusician]

AMD wouldnt licence them X86-64, i thought that it was clear for everyone, Intel and AMD have cross licencing agreements that would be nullified should one of the two be bought by any third party, Nvidia could buy Intel but then they could only release 32 bits CPUs.

I'm talking of the foundry division.

 

[TheELF]

AMD wouldnt licence them X86-64,

Yes they would, have you looked at their numbers lately?! They are making 5% money and that's up from 0%
A good enough offer and AMD would license the crap out of 64bit.
Or nvidia could come up with an alternative 64 bit system like itanium was, it would take long to get accepted but if it would be a good enough implementation it would get accepted.

But to the point, everybody here seems to be forgetting that intel is building a full world worth of FABs right now and is still doing better than AMD was doing in their bad times.
In the last 6 months intel increased their assets by 15bil and increased their liabilities by 4 which is still an 11bil net win.

Intel Reports Second-Quarter 2024 Financial Results; Announces $10 Billion Cost Reduction Plan to Increase Efficiency and Market Competitiveness

www.intc.com

Total assets

$

206,205

$

191,572

Total current liabilities

32,027

28,053

Debt

48,334

46,978

 

[Nothingness]

Or nvidia could come up with an alternative 64 bit system like itanium was, it would take long to get accepted but if it would be a good enough implementation it would get accepted.

That'd be completely stupid when they can pick Arm. What being Itanium-like would bring them?

At this point in the consumer market there are only two contenders at the ISA level, x86-64 and Arm (and even the latter can be considered as viable for every use). Going another way would require between 5 and 10 years to become relevant.

 

[Markfw]

Yes they would, have you looked at their numbers lately?! They are making 5% money and that's up from 0%
A good enough offer and AMD would license the crap out of 64bit.
Or nvidia could come up with an alternative 64 bit system like itanium was, it would take long to get accepted but if it would be a good enough implementation it would get accepted.

But to the point, everybody here seems to be forgetting that intel is building a full world worth of FABs right now and is still doing better than AMD was doing in their bad times.
In the last 6 months intel increased their assets by 15bil and increased their liabilities by 4 which is still an 11bil net win.

Intel Reports Second-Quarter 2024 Financial Results; Announces $10 Billion Cost Reduction Plan to Increase Efficiency and Market Competitiveness

www.intc.com

Total assets

$

206,205

$

191,572

Total current liabilities

32,027

28,053

Debt

48,334

46,978

With client being not much of a factor due to Raptor lake, and Intel losing server market share every quarter, those numbers will only get worse.

 

[FlameTail]

That'd be completely stupid when they can pick Arm. What being Itanium-like would bring them?

At this point in the consumer market there are only two contenders at the ISA level, x86-64 and Arm (and even the latter can be considered as viable for every use). Going another way would require between 5 and 10 years to become relevant.

Indeed. Nvidia and ARM are perfectly suited for each other. They already use ARM for their Grace Server CPUs, and according to the rumours they are making an ARM-based chip for PCs as well.

 

[DrMrLordX]

according to the rumours they are making an ARM-based chip for PCs as well.

And Qualcomm plus Microsoft are doing the trailblazing to attempt to establish an ARM PC market for NV to enter later. All NV has to do is show up with bone stock ARM IP and they'll probably do okay (with custom graphics IP of course).

 

[TheELF]

With client being not much of a factor due to Raptor lake, and Intel losing server market share every quarter, those numbers will only get worse.

Huh?! Like to elaborate?! Client was 7.4bil revenue (more than AMD all segments put together) how is that not much of a factor?!
Nothing will happen to intel due to raptor lake, nothing happened to AMD for having exploding CPUs and this is far less of an issue than exploding CPUs.

 

[AnandThenMan]

Nothing will happen to intel due to raptor lake, nothing happened to AMD for having exploding CPUs and this is far less of an issue than exploding CPUs.

How can nothing happen and one be worse than the other at the same time. Logic fail.

 

[DrMrLordX]

this is far less of an issue than exploding CPUs.

AMD fixed their problem quickly and suffered no appreciable losses. Intel will be on the hook for a ton of money, and they haven't even issued a recall yet. Multiple classes are forming for lawsuits.

 

[Markfw]

Huh?! Like to elaborate?! Client was 7.4bil revenue (more than AMD all segments put together) how is that not much of a factor?!
Nothing will happen to intel due to raptor lake, nothing happened to AMD for having exploding CPUs and this is far less of an issue than exploding CPUs.

First, there is a big difference for having a CPU fail ONLY when the heatsink failed, and one that totally stock degrades and fails.

But keep on coping every quarter as Intel continues to fail.

 

[TheELF]

AMD fixed their problem quickly and suffered no appreciable losses. Intel will be on the hook for a ton of money, and they haven't even issued a recall yet. Multiple classes are forming for lawsuits.

And you know that how?! Because that's what all the sensationalists youtubers are saying?!
We have no idea about the real numbers here just as we have no idea about the real numbers for the exploding ryzen incident.
They are just searching for people that had any actual loss to then see if there are enough of them to then see if it is worth it to pursue a lawsuit.

First, there is a big difference for having a CPU fail ONLY when the heatsink failed, and one that totally stock degrades and fails.

But keep on coping every quarter as Intel continues to fail.

Heatsink?!
Ryzen has a thermal protection that can not cope with voltages that are to be expected in a normal system leading to the thermal protection burning out and them the CPU running itself to death because it can't see how hot it is anymore.

AMD Ryzen 7000 Burning Out: EXPO and SoC Voltages to Blame (AMD Responds)

Impacts all motherboard makers and all Ryzen 7000 chips.

www.tomshardware.com

The totally stock is your opinion, and only an opinion.
The CPU does ask for more voltage than it needs, this is the only fact we know for now.

We do not know if with totally stock settings the increased voltage alone would be enough for the degradation we are seeing. We for a fact know that mobos with more extreme load line calibrations increase the voltage even more, so this is another factor, we also know that mobos can put a general limit on the voltage they supply to the CPU, so this is yet another factor.
They have prove that the higher voltage from the CPU alone and nothing more can cause this high an amount of degradation.

Intel will have one bad quarter after the other at least until all the FABs are built up because they use all the money they make for that and then some, what is AMDs excuse for the terrible quarters they are having?

 

[Markfw]

And you know that how?! Because that's what all the sensationalists youtubers are saying?!
We have no idea about the real numbers here just as we have no idea about the real numbers for the exploding ryzen incident.
They are just searching for people that had any actual loss to then see if there are enough of them to then see if it is worth it to pursue a lawsuit.

Heatsink?!
Ryzen has a thermal protection that can not cope with voltages that are to be expected in a normal system leading to the thermal protection burning out and them the CPU running itself to death because it can't see how hot it is anymore.

AMD Ryzen 7000 Burning Out: EXPO and SoC Voltages to Blame (AMD Responds)

Impacts all motherboard makers and all Ryzen 7000 chips.

www.tomshardware.com

The totally stock is your opinion, and only an opinion.
The CPU does ask for more voltage than it needs, this is the only fact we know for now.

We do not know if with totally stock settings the increased voltage alone would be enough for the degradation we are seeing. We for a fact know that mobos with more extreme load line calibrations increase the voltage even more, so this is another factor, we also know that mobos can put a general limit on the voltage they supply to the CPU, so this is yet another factor.
They have prove that the higher voltage from the CPU alone and nothing more can cause this high an amount of degradation.

Intel will have one bad quarter after the other at least until all the FABs are built up because they use all the money they make for that and then some, what is AMDs excuse for the terrible quarters they are having?

Sp, you first compare a problem over 20 years old, where a heatsink falls off, to an Intel problem that even Intel admits is a problem. Then change that to AMD having a high SOC voltage when SOME bios is high when you overclock the memory. Talk about changing goal posts. Then you change from Intel has no problem, as they are still in business to admitting they will continue to have problems until their foundry's are fixed.

The definition of copium. I will not keep arguing, since you will keep changing your story.

 

[dlerious]

The two leading candidates I see if such a thing were to happen are Apple and Berkshire Hathaway. The latter has $200 billion cash at the moment, that's a lot of "dry powder" as Warren Buffett calls it! He famously never invested in a tech company until he bought Apple stock, and did it because he was able to understand their consumer market in a way that related to how he typically valued his investments because of their customer loyalty.

I believe Berkshire recently cut their stake in Apple.

Why Warren Buffett’s Berkshire Dumped 55.8% Of Its Apple Stock

Berkshire sold 505 million shares of Apple in the first half of 2024 — that is nearly 56% of Buffett's holdings. Should you follow the Oracle of Omaha and sell Apple stock?

www.forbes.com

 

[Doug S]

I believe Berkshire recently cut their stake in Apple.

Why Warren Buffett’s Berkshire Dumped 55.8% Of Its Apple Stock

Berkshire sold 505 million shares of Apple in the first half of 2024 — that is nearly 56% of Buffett's holdings. Should you follow the Oracle of Omaha and sell Apple stock?

www.forbes.com

Yes, though it isn't clear why. Apple accounted for a bigger share than all other equities held by Berkshire Hathaway, and was starting to come close to half its value less cash. I'm surprised he allowed it to grow that large, but trimming it back to avoid having so many eggs in one basket fits with its diversification strategy.

Now maybe he thinks it is due for a big fall and will continue selling, we'll have to see, but even if he did it wouldn't affect his decision whether to be involved in some sort of JV investment with Apple in Intel if he thought such an investment made sense. Bringing Apple in with a commitment for a certain number of wafers would require his own risk, and it isn't like Apple no matter how far it fell would not have the cash to support something like that.