AMD buys Alchemy for PDA processors

Moving into the handheld computing space, Advanced Micro Devices (AMD) on Wednesday announced the acquisition of Alchemy Semiconductor.

The acquisition allows AMD, one of the world's leading computer processor makers, to expand its processor business to handheld devices such as personal digital assistants (PDAs), the company said in a statement.

The new business will be part of a newly created business unit, dubbed Personal Connectivity Solutions, that will focus on non-PC connectivity devices, AMD said.

"This is quite an exciting announcement. It allows AMD to move in the low-power handheld processor market, where its presence has been pretty much zero," said Andrew Brown, research manager mobile computing at analyst firm IDC.

Alchemy Semiconductor, privately held and founded in 1999, sells MIPS-based processors for what it calls the Internet Edge Device market, which it says includes wireless PDAs, information appliances and remote Internet access products. However, the company's founders also have a history in chips based on ARM's core, AMD said.

ARM-based processors are gaining popularity in PDAs. Most PocketPC devices have processors based on ARM, and Palm, which currently uses Motorola Inc.'s DragonBall processor for its handhelds, is moving to ARM-based processors.

IDC's Brown expects AMD to get into the ARM-based market.

"I think that is the only way to go forward," he said. "MIPS had a greater presence in the past, but the market (now is) divided up into DragonBall and ARM."

The takeover is not just about handhelds, but about the whole market for processors for non-PC devices, the embedded processor market, said Jim Tully, chief analyst at Dataquest, a unit of Gartner.

"It will help to get AMD into the embedded market. Not just handhelds, but also the wider embedded market, such as automotive and telecommunications products," he said. "There is a vast range of embedded market opportunities. This deal helps AMD to break out of the purely PC market."

The Alchemy team's expertise is what is important for AMD, not the company's few products, according to Tully.

"AMD could have simply taken out a license on the ARM or MIPS core, but that would have meant they would have to go through quite a steep learning curve. Now they have bought a top-class team of processor design engineers. This team is the same team that designed the StrongARM based on the ARM core, which was later bought by Intel," he said.

The acquisition is expected to be completed in the first quarter of this year, AMD said. Terms of the deal were not disclosed.

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