AMD abandons the microserver market, takes $75 million hit

As part of its 1Q 2015 earnings release, AMD has announced that it is leaving the high density microserver market, effective immediately.

AMD bought SeaMicro in 2012 for $334 million to get a foothold into the microserver business. At the time, SeaMicro built systems containing dozens of Intel Atom and Xeon processors connected to a shared storage and network fabric.

Since the acquisition, AMD has only released a single new SeaMicro system, the SM15000. This could use either AMD Opteron systems (using the Piledriver core) or Intel Xeons (using the Ivy Bridge core). With today's announcement, it's clear that system will also be the last new SeaMicro system to be released.

As a result of exiting this market, the company is taking a $75 million special charge, primarily due to the impairment of intangible assets. This will include a $7 million cash payout. AMD is, however, retaining the SeaMicro-developed fabric technology. When announcing its plans to build ARM processors, AMD said that the fabric was a key tool to make ARM processors useful in server scenarios. Intuitively, it would seem that ARM processors would have been a good fit for SeaMicro technology.

However, little has been seen of AMD's first planned ARM processor, the A1100, since its announcement last year. Although a development kit was released last year, servers built around the chip do not appear to have materialized yet.

The company posted first quarter revenue of $1.03 billion, down 26 percent year on year. It made an operating loss of $137 million, down from a $49 million operating profit in the first quarter 2014.