Rumor: Dell Interested In Buying AMD - Why?

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We’ve seen some questionable corporate acquisitions in the tech space in the past, but this one would have to be one of the oddest. Things haven’t been easy for chipmaker AMD recently, who’s getting squeezed on the low-end by ARM and on the top-end by Intel. Bloomberg News is now reporting that there is chatter inside AMD that the company is up for sale. And Barron’s reports that Dell, of all people, is interested. Wait, what?.

Bloomberg wrote that Patrick Wang, an industry analyst at Wedbush Securities, said:

There is no management team there [at AMD]. It’s a far- fetched possibility [that AMD is up for sale].

AMD recently had a turnover in their top management. AMD CEO Dirk Meyer was sacked the day after CES 2011 ended. And COO Robert Rivet was shown the door last week. Barron’s, another financial news outlet, wrote:

I would say the recent departures of senior executives — COO Robert Rivet last week, CEO Dirk Meyer back in January — is still unexplained and can lead to all kinds of speculation. There’s not a lot of color on the rumor at this point. Is Dell considering making a more integrated kind of product line? Talk about a change in strategy.

Why would Dell buy AMD? I guess the reasoning would be that they would be they would be able to have their own semiconductors in all of their computers, phones and tablets. We’re seeing all the American computer manufacturers like Apple, HP and Dell move towards being general consumer electronics companies, like Samsung and Sony. And the likes of Toshiba and Samsung do have business divisions that manufacturer ARM processors. I guess it wouldn’t be completely ludicrous that Dell would want their own processor company if you look at it from that angle – but why?

AMD’s current market value is $6.26 billion. In their latest financial statement filed with the SEC, Dell reported $12 billion in cash-on-hand, so such a deal is financially possible.