Advanced Micro Devices Inc. will license its graphics designs to Samsung Electronics Co. for use in smartphones and tablets, taking its technology into a new market and helping differentiate products from the world’s biggest smartphone maker.
The agreement, which is limited to mobile devices where AMD hasn’t supplied chips, will be worth hundreds of millions of dollars in licensing revenue to the U.S. chipmaker. Samsung gets access to the designs of one of the top two makers of graphics chips used in PCs, technology that could elevate the performance of its devices. AMD shares jumped 7.5% to $29.47 in New York Monday while Samsung gained 3% in Seoul.
The Korean company may be trying to use AMD to make its products stand out in graphics-intensive applications such as mobile games.
The U.S,. company is the second-largest maker of graphics used in cards that allow computers to create more realistic images in games, a market dominated by Nvidia Corp. Smartphones typically use graphics from Qualcomm Inc. or Softbank Group Corp.’s ARM unit, while Apple Inc. designs its own chips.
Under Chief Executive Officer Lisa Su, AMD has been concentrating on wining back lost share in PCs and server computers by revamping its products for those markets.
Licensing its technology to Samsung, whose own chip unit supplies only a portion of its mobile division’s needs, will provide AMD a way to participate in the massive market for smartphone parts without the risk of investing directly.
Su has previously shown a willingness to be flexible in monetizing AMD’s technology via a graphics tie-up with rival Intel Corp.
AMD’s rebounding earnings and the promise of market share gains has helped its stock rally almost 50% this year, making it the best performer on the Philadelphia Stock Exchange Semiconductor Index.