Why Xilinx And Its FPGAs Have A Bright Future With AMD (Or Not): Part 3 (NASDAQ:AMD)

When I first learned AMD (AMD) was rumored to consider acquiring Xilinx (XLNX) I struggled to understand the rationale behind it. The products looked quite different. Xilinx is the leader in a unique type of chip called FPGA. Intel (INTC) made a similar acquisition in Altera years ago. Supposedly Intel wanted to combine its CPUs with the Altera FPGAs. But that hasn’t exactly been a raving success. What’s AMD’s CEO Lisa Su’s angle here? What are the odds of a competing offer? Does Xilinx hold a critical piece of technology or can that be acquired elsewhere? I didn’t have the answers to those questions.

Usually, it goes a long way if I put in the hours and read up. But semis aren’t just any subject. It’s a complicated field where even seasoned execs can make an ill-fated bet putting their company well behind the competition. I’m no stranger to hard-to-understand industries. I like biotech. But in the semis the different technologies are not just complex, they interact with each other. And that can actually yield a breakthrough combination.

That’s why I asked Philip Freidin if he’d be willing to be interviewed by me for Seeking Alpha. Philip has been for 10 years both at AMD and Xilinx which is perfect given the backdrop of this potential merger. After that, he consulted for 10 more to various semiconductor companies from small to big.

At both AMD and Xilinx, he’s held a product planning role. Product planning is the ongoing process of identifying and articulating market requirements that define a product’s feature set. To do that well in semiconductors you need to talk to end users and try and predict what their needs are going to be three to four years down the line. Then you have to translate that into product development “bets” that are likely to work for your company.

I couldn’t be more thrilled to have been able to interview Philip on this subject. We ended up talking for hours in a wide-ranging conversation.

This is actually a three-part-interview. I assume you have seen the first which you can find here. In that video we cover the basics of FPGAs. The second part is here.

Later Philip talks about Xilinx and its strategy to become the leader in the space. Why Altera is a competitor to respect, while others are quite far behind for now.

As were others, he’s surprised at the rumor of AMD interest.

He isn’t immediately convinced it makes a lot of sense. There could be some angles to a combination that he all touches on. In these areas, the companies could potentially benefit from a combination. But overall, he’s not sure why AMD wouldn’t go for a licensing deal, with limited rights, in those specific areas.

We also get into Xilinx’s latest technological advancement, the Versal ACAP, and whether that’s a game changer for Xilinx. We also get into whether FPGAs can be combined with CPUs on one die.

Higher-performance SoCs are very important to AMD and Philip speculates that the company could be interested in Xilinx’s latest iteration of its silicon interposer technology which could help AMD’s 2.5D packaging.

In this final part, Philip is kind enough to answer several reader questions.

Because it runs very long I’ll release the full interview in three installments. These take time to edit, get ready, upload and go through the editorial process.

Enjoy it when you have time to enjoy long-form content and contemplate the next paradigm shift.

I know these long-form interviews are not for everyone. If you do enjoy these interviews please like, subscribe, share the video. It makes all the difference to our guests, knowing people are interested to hear from them, learn from them and can be inspired by them.

Philip will look at the comments, so give him a shoutout, and if you have a question for him that I didn’t get to or didn’t ask, throw it out there.

Bram de Haas writes the Special Situation Report. He looks at special situations like spin-offs, share repurchases, rights offerings and a lot of M&A events. If you are in a good mood follow him on Twitter here or reach out through email at dehaas.bram@gmail.com.

Disclosure: I am/we are long XLNX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Be the first to comment

Leave a Reply

Your email address will not be published.