Ladies and gentlemen, thank you for standing by. My name is Huey, and I'll be your conference operator for today. At this time, I'd like to welcome everyone to AMD's conference call. All lines have been placed on the listen-only mode. After the speaker's remarks, we'll invite you to participate in the question and answer session. As a reminder, this conference is being recorded. Now, I'd like to turn the conference over to Ms. Ruth Cotter, Vice President of Investor Relations for AMD. Please go ahead.
Thank you, and thank you all for joining us today. We're pleased to spend some time talking with you about our announcement that AMD has signed a definitive agreement to acquire SeaMicro. Joining us on today's conference call are AMD President and CEO Rory Read, and AMD Senior Vice President and General Manager Global Business Unit, Lisa Su. Thomas Seifert, Senior Vice President and Chief Financial Officer, and SeaMicro CEO and soon-to-be General Manager of the newly created Data Center Server Solutions Team, Andrew Feldman, will both participate in the Q&A portion of this call. This is a live call and will be replayed via webcast on AMD.com. There will also be a telephone replay. The number is 888-266-2081. Outside of the United States, the number is 703-925-2533. The access code for both is 1570412.
The telephone replay will be available for the next 10 days, starting later this evening. Today's call is also being webcast live, and an archive of this webcast will be available for the next 30 days on our website, also starting later this evening. Before we begin today's call, I'd like to caution everyone that we will be making forward-looking statements about management's expectations. Investors are cautioned that those statements are based on current beliefs, assumptions, and expectations, speak only as of the current date, and involve risks and uncertainties that could cause actual results to differ materially from our current expectations. The semiconductor industry is generally volatile, and market conditions are particularly difficult to forecast. We encourage you to review our filings with the SEC, where we discuss the risk factors that could cause actual results to differ materially from our expectations.
You'll find detailed discussions about such risk factors in AMD ' annual report on Form 10-K for the year ended December 31, 2011. Now, with that, I'd like to introduce Advanced Micro Devices President and CEO Rory Read. Rory?
Thank you for joining us on what is an exciting day at AMD. Today, we are taking another step to position our company to seize the inflection point in our industry through the acquisition of the industry pioneer SeaMicro. This acquisition strengthens our ability to take advantage of key trends that are emerging in our market around consumerization, convergence, and the cloud, and accelerates our transformation into an agile, disruptive innovator. SeaMicro is an undisputed leader in the low-power server technology space. This is a great company with innovative IP and great talent that complements our existing AMD capabilities. Our existing processor and platform IP, combined with SeaMicro's system and fabric technology, uniquely positions us with a compelling, differentiated position in the fast-growing segment of the server market.
Earlier this month, at our AMD Financial Analyst Day, I talked about the inflection point that's occurring in the industry, which is driving a radical shift in today's server market. The increased adoption of cloud computing is fundamentally changing the economics involved in deploying a modern data center. This opens up the opportunity for AMD. As we embrace this shift by making a strategic investment to ensure we can take advantage of this opportunity and create a leadership position, we are clearly skating to where the puck is going, driving solutions that bring value to our customers and partners and helping them win. SeaMicro expands on our capability to deliver extremely low-power server platforms, complementing our existing server development work. This technology will enable our customers to deliver unique system-level integration capabilities.
SeaMicro's fabric technology and system design capabilities, combined with ambidextrous technology, uniquely position AMD to offer industry-leading server building blocks tuned for the fastest-growing data center workloads, such as dynamic web content, social networking, search, and video. Our extensive processing and graphics IP allows us to provide customers with a wide range of purpose-built server SOCs. With SeaMicro's unique technology, we now have the ability to seamlessly pull all of this processing IP together using a common interconnect. This combination provides customers with a range of processor choices for tailored system-level designs that can significantly reduce data center complexity, cost, and energy consumption while improving performance. This is the right investment to ensure we have the IP and capabilities necessary to accelerate long-term growth in our server business.
As we take advantage of this opportunity, we are also firmly committed to our traditional server business and will continue to focus and invest in this key area. We know our opportunity to grow the server business in the near term revolves around consistent, dependable execution. 2012 is about solid execution, getting fit to fight while repositioning the company to capture the opportunities in front of us. Our 2012 operating expense and gross margin guidance provided earlier in the year remain unchanged. This is AMD's time, and we'll create our first lift of value creation by becoming a solid execution engine and delivering on our commitments. At the same time, we will drive a second lift of value creation by positioning ourselves to capture the opportunity this market inflection point brings. That is exactly what the acquisition of SeaMicro helps us to do.
We will embrace these changes in the market and seize the opportunity to step out of the shadows and lead. With that, I'd like to invite Lisa Su to share her perspective on today's announcement and what it means to our customers and the data centers of the future.
Thank you, Rory. AMD , one of the things that really attracted me to the company was the tremendous wealth of processing and platform IP we have already. With today's announcement, that portfolio of IP will become considerably strengthened and arguably second to none for the cloud data center market. Cloud data centers are the fastest-growing segment of the server market, growing at a 15% compound annual growth rate through 2015, according to IDC. As this market grows, the new cloud workloads, such as web hosting, search, video, and social networking, have come to dominate the compute landscape. Data center customers want server solutions that are tailored to these new workloads that consume less power, take less space, and reduce total cost of ownership. The SeaMicro team has accomplished just these objectives by creating the technology building blocks to enable this step function increase in functionality and capability.
Foremost among SeaMicro's innovations is their fabric technology, which seamlessly connects hundreds of processor cores, memory, storage, and I/O traffic in a very efficient way, which drives down the number of components in the system, reduces the overall power consumption, and improves the total cost of ownership. For the most common web workloads, the SeaMicro technology uses one-quarter of the power and one-sixth of the space of a traditional server while providing up to 12x the bandwidth per core, resulting in up to an 80% reduction in total cost of ownership. This fabric technology is also designed to be processor agnostic. That means it works with any instruction set and can transport any protocol, which makes it an ideal foundation for our ambidextrous strategy. SeaMicro's leading-edge technologies, together with Advanced Micro Devices' processor design and compute expertise, is a very powerful combination.
Integrating our strong Opteron-based server roadmap with SeaMicro's technology will provide customers with a range of processor choices and platforms that can substantially improve the total cost of ownership, power, and performance value proposition going forward. While we're very excited with this announcement today, we're also intensely focused on execution. To ensure that we maintain the momentum that SeaMicro has already created, we plan to integrate SeaMicro in a newly formed business known as the Data Center Server Solutions business of Advanced Micro Devices. That will be led by Andrew Feldman, the current CEO of SeaMicro, reporting to me. In addition, the mainstream server business that is responsible for the Opteron-based silicon today will continue business as usual, laser-focused on execution and building on the momentum we have created over the last two quarters with our Interlagos-based products.
With solutions deployed at a variety of customers across the world, SeaMicro, and now Advanced Micro Devices, will continue to support all current customers and products while accelerating new solutions for data centers. SeaMicro has a strong roadmap today that we will further enhance with Advanced Micro Devices Opteron silicon in the second half of this year. As we move forward, our goal is to leverage the combination of the SeaMicro IP and our processor capabilities to create industry-leading flexible silicon solutions to our OEM customers. This offers a tremendous opportunity to deepen our relationships with our OEMs and to leverage this technology into a breadth of differentiated system offerings in the marketplace. Let me just close by saying that we recognize the server and cloud market is a treadmill that is moving very fast and requires continuous innovation.
The cloud has changed the dynamics of the server industry, the data center, and the way people think about their servers. It's no longer a one-size-fits-all, and we are very excited about the opportunity that this brings for both SeaMicro as part of AMD . We believe the combination of the SeaMicro IP with our AMD Opteron technologies and our focus on execution will give us a unique ability to address the server market in the years to come. As Rory mentioned, at Advanced Micro Devices, we are focused on winning and leading. Today's announcement is an exciting step forward. Let me now turn it back to Ruth for the Q&A.
Thank you, Lisa. Huey, we now would like to open the call for questions and answers. Please, if you could poll the audience. Thank you.
Yes, ma'am. Ladies and gentlemen, if you would like to ask a question at this time, please press star then one on your touch-tone phone. If your question has been answered or wish to remove yourself from the queue, you may press the pound key. Again, to queue up for a question at this time, please press star then one on your touch-tone phone. One moment for questioners to queue. Our first questioner in queue is Uche Orji with UBS. Your line is open. Your questions, please.
Sure. Thank you very much. Rory and maybe Lisa, let me just start by asking you how you intend to balance what is effectively seen as buying into your customer base with the needs of your other customers who may also have the intention to play in the microserver market, which is really what SeaMicro addresses today. How do you balance that? That is my first question, and I have it for a lot.
Uche, it's good to hear from you. I think it's a very exciting time in the marketplace, and Advanced Micro Devices is firmly committed to bringing interesting and capable advanced technology to our customers, our partners, in order to help them win in the marketplace. We will not compete with our customers. Of course, we'll support our current SeaMicro customers as we move forward, but our focus is to combine SeaMicro's outstanding, innovative IP and fabric with Advanced Micro Devices' technology, IP, and solutions that allow us to go to market in a very effective and efficient way. We believe that this creates value for the OEM partners as well as the end customer, because at the end of the day, it's all about creating value for them. It is about enabling them to win. They win, we win.
Yeah, and I'll just add to that, Uche. You know, when we think about the acquisition and the reasons for it, I mean, this is a technology play for us. The technology here is unique in the industry and will give us an opportunity to really create more value with the combination of AMD silicon and the SeaMicro IP. We see the opportunity to work with our OEM partners much more closely, so the opportunities to collaborate are actually much larger than anything by itself. It is really an opportunity to innovate on the basic technology building blocks. Think of this as technology building blocks that we are going to work with our OEM partners very closely on so that they can add their secret sauce on top of our basic technology.
That's great. Just one quick follow-up. Besides that, SeaMicro already had some relationship with Intel on the Atom side. Can you comment on how you intend to, as you start to ship, obviously, with them in the back half of 2012, how you intend to wind down that relationship? Also, if you can talk about where SeaMicro plus AMD solution stands relative to the other lower-power suppliers which are going to be using ARM solutions. That's my last question. Thank you.
Yeah, let me take that. The opportunity here is really the SeaMicro fabric works with a variety of processor solutions. It was designed that way from the ground up. There are Intel-based Atom and other products in the current SeaMicro products. We will continue to support those customers and those products as we should, but we really look to accelerate the use of AMD silicon, and we will see that in products towards the end of this year. We see lots of opportunities to really broaden the product portfolio, whether you're talking about big cores or little cores for a number of different applications.
In comparison to the solutions that will be coming from the ARM camp, is there any way for you to kind of help calibrate where you stand relative to what may or may not be coming from the ARM camp, Calxeda, or perhaps Marvell or even Qualcomm, any of the companies that are currently having intentions of coming to the server market using ARM solutions?
Sure. This is Andrew Feldman.
Hi, Andrew.
Hey, how are you? The fabric we've designed and the system that we've built is today capable of handling any x86 processor, any ARM processor, or any other processor for that matter. The technology that we're bringing to AMD is ready today for any number of different processors, any number of instruction sets, or any different protocol that our partners wish to run over our system. I think they're ready today, and the questions on the table are one of roadmap. I'll let Lisa and team talk to those.
You know, Uche, it's very important to reflect back on what we talked about at Financial Analyst Day around the idea of an agile and ambidextrous architecture, one that improves our speed to market, our ability to react quickly, reuse IP across our processor base. SeaMicro and their design and architecture approach fully aligns with that game plan and gives us the full flexibility in order to deliver solutions that matter to our customer. Again, if the customer moves in that direction with an agile architecture, with an ambidextrous architecture, with the SeaMicro fabric, we can react to it and deliver on it.
Perfect. Thank you very much and congratulations and good luck with it. Thank you.
Thank you, sir. Our next questioner in queue is Glen Yeung with Citi. Your line is open. Your questions, please.
Thank you. You know, when I think about the ARM approach to the solution, typically we see a fabric technology that is actually part of an SoC silicon solution. Lisa, I think I heard you say that there would be a silicon solution at some point, and correct me if I'm wrong there, but ultimately is that the intention to have AMD silicon and SeaMicro technology on one silicon solution?
Yes, Glen. If you go back to the comments, it is very much possible to do that. You know, when we look at the progression of the technology, I think the processor technology plus the fabric would be a natural evolution.
OK, great. I guess I am hearing that correctly. The other question I have here is, you know, I guess with SeaMicro also comes Fred Weber, and I wonder, you know, who was obviously a very important person at AMD in the past, and I wonder if he continues to play a role in the combined entity.
From the standpoint of the business and the organization, as we acquire SeaMicro, their board will move away because that won't be a separate firm any longer. We're excited about the talent and the organization. When you think about an acquisition like SeaMicro, it's about the talent, the ideas that this team has put together over the past several years to create this innovative fabric and solution. We're pretty excited about Andrew and Andrew's team. They see the vision. They see the opportunity. They see the same inflection point. I think it's our time and our opportunity to go after this inflection point to make it happen. This is one of the number one reasons we were intrigued with creating this relationship and acquisition with SeaMicro.
Can I just ask one last question, which is, when you think about the future opportunity to have an integrated solution, do you, in your mind, envision a unique server architecture outside of just the fabric technology getting from SeaMicro? Does AMD need to develop a new server chip to optimize what they can do with SeaMicro, or is it really a matter of integrating the existing server platform that you have?
Yeah, Glenn, let me kind of do this in a couple of steps. I mean, the way we do this technology, it's very complementary. It augments our current portfolio. You know, we have a very good IP portfolio today with our Opteron technologies. We will continue to innovate on top of that. I think the SeaMicro fabric is another piece that we can add to the tool chest. I wouldn't call it a unique server architecture. I would call it a set of technology building blocks that we can combine in a number of approaches to address these new workloads. Because these new workloads are developing over time, we'd expect that there will be a number of solutions over time.
That's wonderful. Actually, last question is, I understand SeaMicro has some business with Mozilla. Is there a chance to continue the business that they had with Intel and kind of convert that over to AMD?
We do have business with Mozilla. This is Andrew Feldman. They're one of our announced customers and one of many customers we have both domestically and abroad. I think we intend to continue to meet those customers' requirements. We're committed to delivering to them the products they've asked us to deliver so far and continue to support the products that they're asking for. I think over time, we're looking to provide to these customers extraordinary solutions that reduce their total cost of ownership. I think that's what they will get from us. That's what they got from us in the past, and that's what they'll get from us in the future.
Congratulations.
Thank you so much.
Thank you. Next questioner in queue is David Wang with Wells Fargo. Your line is now open. Please go ahead.
Hi. Thanks. Just a clarification. For the future products developed out of SeaMicro, are you planning to develop new systems products that will be fully fledged server systems, or are you saying that you're going to be making chip technology, that you'll be using fabric as chips and Opteron chips that you sell to other server makers to make their own systems?
Right. Our intention is really, as we said, from a technology standpoint, we want to provide technology building blocks to our OEM customers so we can build really differentiated solutions by our customers. When we look at the SeaMicro technologies today, there are a lot of opportunities to collaborate in those areas, and that's what our plans will be. We will, of course, put AMD Opteron silicon into some of the current systems, and that is from a standpoint of extending the technology and extending trials.
Great. What are SeaMicro's current revenues?
We are not disclosing the revenues on a SeaMicro level, but it's fair to assume that we will see already sizable revenues for this year.
Great. My last question, you talked about using Opteron in microservers. One of the things SeaMicro does is it has very dense Atom-based servers. Is there a similar plan to use Braswell chips in future SeaMicro products?
You know, as we look at the roadmap, there are lots of opportunities. We're going to start with Opteron towards the end of this year, and we will talk about future products as we go along.
Hey, Dylan, David, this is Andrew. One of the things we thought that was so exciting about joining AMD was the ability to take this technology across multiple different types of processors, small cores, medium cores, large cores. That was something that we couldn't do for want of resources as a startup. While the technology had phenomenal applicability in multiple markets with multiple processor types, that's something we can get as part of AMD.
Great. Thanks very much.
Thank you, sir. Next question in queue, Srini Pajjuri with CLSA Securities. Please go ahead.
Thank you. First, Thomas, you know, I know you don't want to disclose the revenues, but could you give us some idea how we should think about the margin profile? Also, I guess you're saying it's going to be accretive. Could you give us some idea how accretive it's going to be?
What we said is that for this year, we are not required to change the guidance we provided for Advanced Micro Devices that we gave at the Financial Analyst Day. Moving forward, we think that SeaMicro beyond 2012 in the next year is going to be accretive. We'll not update our guidance or provide guidance for 2013. We'll do this at the appropriate time.
We also were very open saying that beyond the neatness and the attractiveness we saw in the technology, we are interested in the server segment because it provides us opportunity and access to business significantly above our normal corporate average across margins.
OK. Maybe for Lisa or Rory, obviously, it looks like this is a technology acquisition, and the biggest value add, from what I understand, is the switch fabric here. Is there anything else that you need in terms of offering a complete solution to your customers, whether it's software or any other peripheral chip technology that you need to acquire that you don't have currently?
Sure. There is no doubt by acquiring SeaMicro, Advanced Micro Devices is definitely accelerating our ability to implement the disruptive server strategy that we've been talking about and to stake out a leadership position in this fast-growing segment. I think it's also important to note there will be not a single movement in terms of our focus, our intense focus on improving our execution in 2012. We will remain intensely focused and delivering on our commitments and delivering on each one of those that we make to our customers and moving forward. Clearly, we create one lift through solid execution, and the second lift is through this opportunity to skate where the puck is going.
I think maybe, Lisa, you want to comment a little bit on what does this IP do, and do we have the pieces, the building blocks, in order to make this disruptive server strategy really sing?
Yeah, I think, sure. The way we think about this is, you know, prior to the acquisition, I think we had a strong set of assets addressing the server space, and we were already quite focused on the cloud as where we believed the major growth was. With the acquisition of SeaMicro, that really adds to that portfolio tremendously. I think we feel very good about that portfolio. We feel very good about the skills, the important piece being Andrew and his team are extremely skilled in this market, and it will enable us to continue to innovate on all of that IP.
OK. One question for Andrew, if I may. Andrew, obviously, you seem to have decent success in this market. Given that your technology works with pretty much any CPU out there, what was the reason behind choosing Atom and not AMD or ARM? Thank you.
As a startup, one of the most challenging parts of your life is the fact you have more opportunity than you have resources to pursue. We wanted very badly to build with a collection of different processors, and we were unable to just because of resource and of focus. When we were approached by Advanced Micro Devices, what we saw was an opportunity to broaden our reach, to accelerate the rate at which we could transform the server market, to accelerate the rate at which our technology, our passion, and what we've invested four and a half years of our life in bringing into the world, we could watch that in more markets and more geographies across sort of all aspects of the server market. That was a very, very long path as a startup.
What we have a chance to do is jumpstart that as a part of Advanced Micro Devices.
Thank you.
Thank you, sir. Our next questioner in queue comes from Mark Lipacis with Jefferies. Your line is open. Please go ahead.
Thanks for taking my question. First one is, I guess I'm trying to understand what is proprietary or defensible about the fabric. I was hoping maybe you could go just one layer deeper in terms of what the value add or what the product does and what the value add is. Thanks.
Sure, Mark. Without flubbing you guys with too much technical detail, there are three primary technologies that are inside the fabric. These technologies are patented and live inside of an ASIC that we designed. The first technology is called I/O virtualization technology, and it allows us to eliminate all but three components from a motherboard, to remove hundreds of components from the motherboard, leaving only three. Those three are a processor, DRAM, and our ASIC. That allows us to shrink the motherboard to the size of a business card. The second piece of technology is called TO, and it stands for turn it off. The turn it off technology allows our ASIC to reach inside a microprocessor and turn off blocks that aren't being used. Step one is eliminate unneeded components, shrink the motherboard both in size and to only three components. Step two is power optimize those components.
The third piece is a supercompute-style fabric. That supercompute-style fabric can tie together hundreds or thousands of these mini motherboards that have been power optimized. It can tie them together at industry-leading bandwidth at a fraction of the cost that anyone else can do. Those technologies are both patented and are embedded in our ASICs and have proven over the past 30 years of people building fabric design extraordinarily difficult to do.
Thank you. That's very helpful. The second question is, Lisa mentioned the cloud as an area of focus and where this is applicable. Is there a particular set? I mean, the cloud can mean a lot of different things. Is there a set of applications or a target market that you guys think you're going to be particularly successful in, or does this just apply to everything? Thanks.
Yeah, certainly.
That's my question.
Right. Thanks. Certainly, we view that you're right. The cloud is a very broad term. When you look at the workloads that are particularly good for this type of technology, it is those mega data center workloads. It is the heavy web-based workloads, web hosting, video, some of those types of workloads. We also view, though, that this technology is very applicable quite broadly. It's a matter of time where we see it getting into things like high-performance computing and other areas like that as well. Maybe, Andrew, you want to add some color to that?
Sure. I think a couple of things. We've had success, and I think the first success is in what we call production environments. Those are people who manufacture profit with their servers, right? Those are the names you know as the web monsters, or people who use servers as primary to their mission, and that would be the intelligence community. I think one of the interesting things about what we've seen over the last eight or 10 years is that these customers are harbingers of things to come in the enterprise. What they're doing today will, over time, diffuse back into the enterprise. By focusing on this group of customers who are the largest and fastest growing, what you get is a sneak peek at what the largest enterprises will be doing over the next several years. That's really been what we've seen and where we're focused.
Thank you.
Operator, we'll take the next question, please.
Yes, ma'am. Next questioner in queue is Patrick Wang with Evercore Partners. Please go ahead. Your line is now open.
Great. Thanks. Congrats on the acquisition of a very cool company. Congrats to Andrew and his team. Rory or Lisa, I was hoping you could talk a bit more about your strategic vision here. Specifically, can you talk about how SeaMicro's proprietary fabric IP is going to influence your server processor roadmap and maybe server mix over time? Also, can you help us understand a bit more when AMD technology does meet SeaMicro technology in the server? I have a quick follow-up.
Patrick, there's no doubt that this move is clearly about our vision of where the server market is going. In the immediate time frame, the medium term, and even long term, our traditional server market is going to play a key and huge role in our business. We're in that business to stay, and we're going to continue to grow it. We've seen two solid quarters of continuing improving momentum in our traditional server space, and we'll invest and continue to develop that and expand on it quarter in and quarter out. We know our OEM partners and our go-to-market partners there are dedicated to helping us expand that base and helping customers win in that traditional server space. At the same time, we've got to capture this inflection point. We've talked about it before. Our vision is the market will continue to evolve around cloud types of application functions.
As those cloud functions begin to first exhibit themselves in data, video, and web search, and mega data center, and social media application, as Andrew just said, it will expand across the portfolio. By embracing and facilitating this disruptive event, I believe that we can take a leadership position not only in the traditional space but can begin to define with our OEM and our go-to-market partners the customer workloads, the customer solutions that will make a difference not only in the mega data centers today, but in the traditional server or the enterprise servers down the road.
Patrick, just specifically to your question about the 2012 roadmaps, the 2012 roadmap for server is absolutely the same as it was when we talked about it a few weeks ago. The execution, we're in the early part of the product cycle for Interlagos. We have a lot of work to do to continue to execute on that, and we're very focused on execution. We talked about Abu Dhabi being the next phase of that. That is completely the same. What we are going to do with SeaMicro IP is to add some of the AMD Opteron solutions to that, and we will see those products in the marketplace towards the second half of this year.
OK. Got it. Secondly, I understand that the SeaMicro ASIC can talk to just about any processor out there, and I think they worked pretty closely with Intel in the past. It sounds like they were also engaged with other low-power server folks as well. I realize you're going to try to keep this business going, but can you talk about how you feel like these relationships are going to play out? A couple of years down the road, will the SeaMicro-based system solutions really be AMD-centric?
Maybe let me start, and I'll let Andrew comment. Clearly, when we go back to the thesis for the acquisition, it is about the technology building blocks and the capabilities that the fabric is going to bring to our solutions. That is the clear focus. We are going to support the current SeaMicro customers. We absolutely plan on doing that. We really see this as an opportunity to partner with our large OEM customers. That's where we see a lot of value being brought to the table because we're going to give basic technology building blocks that are very good, and then they can add on top of it their specific proprietary system-level knowledge. That's the way we view this acquisition playing out.
OK. You mentioned that the SeaMicro technology would help, I guess, bridge over into the traditional server segment. Any thoughts on how you guys plan on doing that or when we'd see that?
We believe that this strategic transaction allows us to tap these opportunities immediately in this fastest-growing segment of the market. There is no doubt that as we see that workload, whether it's in large financial institutions, in big development organizations, we think some of those same trends are beginning to emerge across the traditional space. We're going to target first in that fast-growing cloud segment, use that to influence our roadmap, continue to build on our strategy around our traditional space by adding share quarter in, delivering on our business quarter out. That will give us the foundation and then to move across that into the traditional space moving forward.
Great. Thanks, and congrats again.
Thanks, Patrick.
Operator, we'd like to take two more questioners, please.
Understood. Next questioner in queue is Vivek Arya with Bank of America. Please go ahead. Your line is now open.
Hi. This is Ashish Rao instead of Vivek. Just one question, and then I have a follow-up. I know you don't want to provide sales and margin details at SeaMicro, but I was just wondering, are all of SeaMicro servers based on Intel, Atom, and Xeon products, or are there other processor suppliers also? Is Intel obligated to continue to sell server processors given the change in control now?
Currently, all SeaMicro servers at customer sites are based on Intel silicon. We were purchasing Intel silicon from distribution, not from Intel directly.
OK. Got it. Second question, more for Lisa. Like Intel has attempted to do with Atom, do you think you plan to take any of your low-power client cores such as Jaguar and create an integrated solution with SeaMicro, or are you more focused on developing new cores, x86 or otherwise, that might be better suited towards the even lower power kind of server microservers?
Right. Once again, I think the beauty of the SeaMicro fabric is that it does work with all processors and all ISAs. We're going to start with Opteron. We have a lot of processing technology. We really are very pleased with where our APU lines are going. I would expect over time that you'll see more products from us, whether it's big cores or medium cores or little cores, to address all of these workloads.
Cool. Thanks.
Thank you, sir. We have time for one final question. Our final question comes from Stacy Rasgon with Sanford Bernstein. Please go ahead. Your line is now open.
Hi, Stacy. Are you on mute?
No. Do you hear me?
Now we can.
Sorry about that. This is John Kofsky for Stacy. I was wondering, have you thought about possibly licensing the interconnect as part of your ambidextrous strategy?
I think we have a lot of opportunities over time to look at the business models that we will go to market with. I think that's something that will develop over time. When we think, once again, about what we're trying to do here, it's really providing strong technology building blocks to our OEM customers to ensure that we can differentiate in the server space. That is our focus today. Over time, we would certainly consider other models.
Thanks. I appreciate it.
That concludes our conference call. We'd like to thank everybody for participating. Operator, can you sign us off, please?
Yes, ma'am. Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day.