Advanced Micro Devices, Inc. (NASDAQ: AMD) is flying early on in the trading session after announcing that it has entered into a multi-year agreement with Samsung. The agreement surrounds the licensing of graphics IP that will be used by Samsung.
As a result of the news, AMD is moving for the top with gains of more than 7% early on in the session. Here’s what’s happening:
AMD Stock Gains On Samsung Partnership
In a press release issued early this morning, AMD said that it entered into a multi-year strategic partnership with Samsung. The partnership, surrounding ultra low power, high performance mobile graphics IP based on Radeon graphics technologies will help Samsung to enhance innovation across multiple mobile applications.
Of course, the key mobile application that Samsung will focus on is smartphones. However, the license is not limited to the use of the IP in smartphones and Samsung may use the IP across a wide range of potential applications.
According to the terms of the agreement, AMD will license its highly-scalable RDNA graphics architecture to Smsung. Samsung will then use the IP in smartphones and other products that compliment AMD offerings.
In exchange for the use of the IP, Samsung will pay AMD license fees as well as royalties. However, the company has not disclosed the amount of these license fees or royalties as of yet.
Why This News Is So Important
At the end of the day, this is huge news for AMD. After all, Samsung is one of the world’s largest smartphone developers, with a strong hold on various markets.
Considering the fact that Advanced Micro Devices will earn, not only license fees, but royalties on sales, the agreement has the potential to significantly expand the company’s revenue and earnings.
However, that’s not the only thing that’s exciting investors. After all, the fact that Samsung has picked the company’s IP for use in the innovation of new products is a source of validation for the world that the company has put into its Radeon product line and the power of this technology throughout the sector.
As we prepare for disruptive changes in technology and discover new opportunities, our partnership with AMD will allow us to bring groundbreaking graphics products and solutions to market for tomorrow’s mobile applications. We look forward to working with AMD to accelerate innovations in mobile graphics technologies that will help take future mobile computing to the next level. – Inyup Kang, president of Samsung Electronics’ S.LSI Business.
Adoption of our Radeon graphics technologies across the PC, game console, cloud and HPC markets has grown significantly and we are thrilled to now partner with industry leader Samsung to accelerate graphics innovation in the mobile market. This strategic partnership will extend the reach of our high-performance Radeon graphics into the mobile market, significantly expanding the Radeon user base and development ecosystem. – Dr. Lisa Su, AMD president and CEO.
What We’ll Be Watching For Ahead
The CNA Finance team will be watching AMD incredibly closely ahead. We’re interested in seeing just how the agreement affects the company’s revenue as once the company’s IP is included in products sold on the market, we believe that it will lead to a substantial gain in revenue.
We’re also interested in seeing if this agreement leads to others as the mobile-technology industry is a highly competitive one. As such, with one of the world’s largest players, Samsung, finding interest in the company’s IP, others may quickly follow.
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What Do You Think?
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