AMD buys server start-up

Advanced Micro Devices (AMD), vowing to change the game in its long-time competition with Intel, has forged a deal to buy a Silicon Valley start-up that takes the chip maker into the server business, The Wall Street Journal reports.

The Sunnyvale, California, company said it will pay $334 million for SeaMicro, a company known for products called micro servers that pack together many chips in ways that save space and energy.

According to Financial Times, the company has ceded server share to Intel in recent years and had less than 10% of the market in 2011, a factor in the decision to replace its CE, Dirk Meyer, last year, according to reports.

Analysts also fear it may be squeezed by the introduction of low-power processors in servers, based on chip designs of the UK's ARM.

However, SeaMicro specialises in energy-efficient, high-bandwidth micro-servers and its technology should match up well against ARM chips. It will be known as the Data Center Solutions Group within AMD, a high-growth area where companies are offering cloud services from remote data centres.

The rapid adoption of cloud computing, where data and applications are stored on or hosted on remote computers via the Internet, is driving worldwide server demand, The Times of India writes.

SeaMicro just last month announced its first servers powered by AMD archrival Intel would be available on the market. It's unclear how the proposed acquisition will affect that partnership.