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Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" AMD has already developed graphics chips for mobile devices, But before the smartphone boom, she had sold this unit to Qualcomm in 2009. However, AMD has recently taken a step back in this market by partnering with Samsung (NASDAQOTH: SSNLF), the world's largest maker of smartphones, will develop new graphics chips for mobile devices. "data-reactid =" 12 "> AMD has already developed graphics chips for mobile devices, but sold them to Qualcomm in 2009, before the smartphone boom, and AMD has recently taken a step back in this market. Associating with Samsung (NASDAQOTH: SSNLF), the world's largest maker of smartphones, to develop new graphics chips for mobile devices.
AMD will not produce new chips. It will license its Radeon graphics technology to Samsung in exchange for royalties and royalty payments. The terms of the deal have not been disclosed, but it sounds like a win-win deal for both companies.
Lisa Su, CEO of AMD, speaking on stage
AMD CEO Lisa Su. Source of the image: AMD.
Why Samsung needs AMD
Most Samsung phones use Qualcomm's standard Snapdragon SoCs, which combine a processor, an Adreno GPU and a baseband modem. However, some Samsung devices run on its proprietary Exynos SoCs.
Just like Qualcomm's SoC Snapdragon, the Exynos SoCs combine a processor, the ARM Mali GPU and Samsung's own modem. Samsung has gradually installed Exynos SoCs in several of its devices to reduce its reliance on Qualcomm, but Snapdragon SoCs have consistently outperformed their comparable Exynos SoCs.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "For example, Android Authority recent comparison Samsung's and Qualcomm's leading SoCs have revealed that "the Exynos 9820 is gaining single-core processor performance, but loses elsewhere than the Snapdragon 855". The Mali GPU, which failed to keep pace with Adreno de Qualcomm, was one of the main weak points of the Exynos. "Data-reactid =" 38 "> For example, Android Authority recent comparison Samsung's leading SoCs and Qualcomm have revealed that "Exynos 9820 is gaining single-core processor performance, but is losing elsewhere compared to the Snapdragon 855". One of the weak points of the Exynos was its Mali GPU, which could not keep pace with Adreno from Qualcomm.
Therefore, it is a good idea for Samsung to license AMD's Radeon technology – previously reserved for PCs and consoles – to challenge Qualcomm. This could make its premium phones more attractive and reduce production costs by using its own Exynos SoCs instead of Qualcomm Snapdragons.
Samsung's booth at CES 2019
Source of the image: Samsung.
Samsung's Samsung unit (TI and mobile communications), which generated 52% of its revenue and 36% of its operating profit in the previous quarter, desperately needs that momentum. During the quarter, poor sales of smartphones resulted in a 4% drop in IM unit revenue, operating profit having dropped by 40%.
Why AMD needs Samsung
The agreement benefits AMD in a simpler way. Samsung's license revenues will strengthen its computing and graphics business, which sells its Ryzen processors and Radeon GPUs. This unit generated 65% of AMD's sales and 42% of its operating profit in the last quarter.
However, its revenue decreased by 26% from the previous quarter due to lower GPU sales, and its operating income fell by 88%. This is where Samsung intervenes: the revenue from licenses have high margins. Therefore, his license payments should increase the unit's operating profits.
AMD can also take advantage of Samsung's 23.5 percent market share in the global smartphone market to attract more mobile developers. These developers could then create cross-platform games – optimized for Radeon chips – for PCs, consoles, smartphones and tablets.
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This move could also widen the gap of AMD against NVIDIA& nbsp; in the GPU market. NVIDIA had previously sold its graphics technology to Intel, but the agreement expired two years ago. Some analysts Intel planned to AMD's Radeon technology license to fill the void, but Intel began developing its own graphics chips. "data-reactid =" 71 "> This approach could also widen the gap of AMD against NVIDIA in the GPU market. NVIDIA had previously sold its graphics technology to Intel, but the agreement expired two years ago. Some analysts Intel planned to license AMD's Radeon technology to fill the gap, but Intel has started to develop its own graphics chips.
Will investors see the results soon?
This partnership is expected to soon generate new revenue for AMD, but the impact is unclear as conditions have not been unveiled. For Samsung, the development of new Exynos SoCs would increase the operating expenses of its semiconductor unit before investors see results in the IM division. It's still a win-win deal for both companies, but AMD should reap more visible profits before Samsung.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 74 "> More from The Motley Fool
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Leo Sun has no position in any of the actions mentioned. The Motley Fool owns shares and recommends NVIDIA. Motley Fool owns Qualcomm shares. The Motley Fool has a disclosure policy."data-reactid =" 82 ">Leo Sun has no position in the mentioned actions. The Motley Fool owns shares and recommends NVIDIA. Motley Fool owns Qualcomm shares. Motley Fool has a disclosure policy.
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