AMD considers buying Ageia

Posted at: 4:07am 21st November 2007 by Ben Hardwidge

Following Intel’s purchase of Havok, AMD says it wouldn’t rule out buying Ageia if the price was right

Now that communications between AMD and Havok have broken down, AMD has admitted that it’s considering buying Ageia, if the price is right. AMD’s head of developer relations, Richard Huddy, told Custom PC that ‘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.’

Despite, Ageia’s disappointing games-support for its PhysX chip, the company's PhysX software is free, and has accordingly been used widely, even if the PhysX hardware itself isn’t supported. As such, buying Ageia could give AMD a chance to continue to compete in the gaming physics arena now that Intel has bought Havok.

The main problem, according to Huddy, is the price. ‘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.’

Why would a company such as Ageia cost so much? Well, now that Intel has bought Havok, Huddy reckons that AMD isn’t the only company thinking of buying Ageia, and this would push up the price. ‘I bet that the same thing has gone through the minds of Nvidia,’ said Huddy, ‘and the other companies that play in this marketplace.’

Huddy even said that ‘someone like Sony or Nintendo might think about doing it to acquire the IP and the hardware for the next generation of technologies. There are a number of players who would be interested – if there was only one then the price would plummet, but unfortunately it’s one of those situations where getting that unique advantage genuinely raises the price for Ageia.’

In a bizarre twist of events, it looks as though Intel’s purchase of Havok could have actually put Havok’s competitor, Ageia, in a better position. As Huddy says, ‘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.’