For decades, chipmaker Advanced Micro Devices has battled for dominance in the computer chip market against rival Intel Corp.
But on Monday, both companies announced they were putting their competition aside to work together. Intel is developing a computer chip for lightweight laptops that combines an Intel processor and an AMD graphics processing unit.
Investors interpreted the news as good for AMD. The company’s share price soared more than 7 percent on Monday, closing at $11.93. Intel’s stock rose by an anemic 1.4 percent to close at $46.70.
This is the first time the two companies have collaborated on a product, though industry analyst Patrick Moorhead noted that in the late 1980s AMD did some manufacturing work for Intel.
This type of chip will be used in thin, lightweight laptops that are still powerful enough to play video games.
In a written statement, AMD vice president and general manager Scott Herkelman said this partnership offers “gamers and content creators the opportunity to have a thinner-and-lighter PC capable of delivering discrete performance-tier graphics experiences.”
The collaboration means that AMD and Intel will essentially be teaming up to fight Nvidia, which is the current market leader in graphics processors and is a competitive threat to both companies. Intel does not develop graphics processors, specializing instead in computing.
“If it’s successful, it lets Intel see revenue from high-performance graphics that it never could before,” said Moorhead, who used to work for Advanced Micro Devices. “And for AMD, they get to see some revenue.”
This type of product for AMD is called a “semi-custom” chip, and the company typically develops chips, which combine computing and graphics elements, for companies such as Microsoft and Sony for their video game console.
The company said it will book revenue from this new semi-custom chip in its Computing and Graphics division because their piece of it is centered around graphics.
AMD is technically based in California but has a large presence in Austin, where it employs 1,500 people. Austin is also where most of its senior executives are based.
The company is in the midst of a turnaround after a multi-year slump caused by a combination of a declining PC market and technology stumbles that let rivals cement their dominance in the market.