In a move that could be a boon to its data center chip business, chipmaker Advanced Micro Devices said Friday that China-based e-commerce giant Alibaba Group Holding will use AMD's products in its cloud-computing services.
Alibaba, China’s largest e-commerce company, is working on expanding the range of services it offers over the internet. The company said it will work with AMD to use the chipmaker’s Radeon Pro graphics, the companies said Friday.
"Working closely with industry leaders like Alibaba Cloud helps ensure the investments AMD is making in our high-performance graphics and computing datacenter products continue to align with the needs of the broader cloud market," AMD CEO Lisa Su said in a written statement.
AMD's shares were up more than 8 percent on Friday morning following the announcement.
AMD, which employs about 1,500 people in the Central Texas area, makes computer and graphics processors that are used in personal computers and other devices, such as servers and game consoles. The company's formal headquarters are in Sunnyvale, Calif., but Austin is where most of its senior executives live and much of its engineering is done.
For AMD, which is the second-largest maker of graphics chips used in high-end computers behind Nvidia Corp., the deal is a chance to kick start a return to the lucrative data center market dominated by Intel Corp. Graphics chips are playing an increasing role in data centers where their ability to process information in parallel makes them useful in certain work loads such as image recognition.
Nvidia has pioneered this more general use of the chips, which had mainly been used by computer gamers to get a more realistic experience from their hardware.
AMD has begun its fight back from market share losses to Nvidia in graphics and Intel in general purpose processors with new products that have closed the gap in performance.
AMD’s stock has more than doubled this year, making it the best performer on the Philadelphia Stock Exchange Semiconductor Index, spurred by improving sales and progress in its attempt to return to profitability. AMD hasn't had a full profitable year since 2011.
AMD in July reported reported a profit of $69 million, or 8 cents a share, for its second quarter. That was driven in part by the sale of a majority stake in one of its testing and assembly facilities. Its revenue increased to $1 billion for the quarter, up 9 percent from the same time a year ago.
After that report, Su said based on the strength of its sales in the second quarter, the company is "well positioned to drive growth and market share gains in the second half of the year."
AMD also netted about $1.2 billion in September from offerings of its common stock and senior notes. AMD priced an offering of $700 million aggregate principal of convertible senior notes. That was an increase from an initially planned offering of $450 million of convertible senior notes, the company said. The notes are at 2.135 percent, and will come due in 2026, the company said. AMD also said it priced a $600 million offering of common stock at $6 per share.
The company said the proceeds from the offerings would be used to pay down debt and possibly also for "capital expenditures, working capital and other general corporate purposes."
Bloomberg contributed to this report.
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