AMD mulls Ageia purchase


— 9:26 AM on November 27, 2007

Acquiring ATI doesn't appear to have gone too well for AMD in the short term, but that isn't stopping the company from considering another purchase: that of PhysX physics accelerator and API maker Ageia. Custom PC quotes AMD developer relations chief Richard Huddy as saying, in reference to a possible Ageia buyout, "We've had that discussion, yes. It's a discussion that goes round every three months – someone turns to me and says 'why don't we buy Ageia?' and I go through the arguments about why we should and why we shouldn't."

Buying out Ageia may not seem particularly sensible in light of the fairly limited success of its PhysX boards, but Ageia also makes a physics application programming interface (API) that has been used in a variety of games for the PlayStation 3, Xbox 360, and Wii. Ageia also plans to bundle its latest physics toolkit with Epic Games' Unreal Engine 3. Since Intel purchased Havok a couple of months ago, riposting with a buyout of Ageia might make sense for AMD. Integrating physics processing tech into, say, ATI graphics processors and future multi-core AMD chips could be enticing prospects, as well.

However, Huddy says the biggest problem with a potential Ageia buyout is money—not a surprising stance, since AMD has lost more $2 billion over the past year.

"Our biggest problem is that Havok reputedly cost in excess of $100 million," says Huddy. "If I'd been valuing Havok, I'd have valued it at probably something like 10 per cent of that because they were in so much trouble in the marketplace, but realistically they did have some valuable IP, and you really can capitalise on that if you're Intel in this situation."

"If Ageia want to command a comparable price," said Huddy, "then that's a pretty significant problem for AMD. No one would think of us as cash rich at the moment, so splashing an extra $100 million just to get physics, which is a niche market, is quite an issue for us."

That problem is exacerbated by the fact that, as a result of the Havok buyout, other companies like Nvidia may now be eying Ageia. The PhysX software and hardware maker has nowhere near the same prestige and market presence as Havok, but Huddy believes even big console firms like Sony or Nintendo are now thinking about acquiring Ageia's intellectual property, thereby driving the bidding price up.

Huddy comments, "If I was predicting [previously] I would say that they [Ageia] would probably grind themselves out of business in a year or so, but now they have an opportunity to sell themselves for a lot of money instead, I suspect." Huddy adds that he would "absolutely not" rule out a possible buyout of Ageia by AMD if the price is right.

 
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