Rumour Mill : IBM to buy AMD

Rumours of IBM making a move to snatch beleaguered chip manufacturer AMD have caused the latter's share price to rise by 8 percent.

AMD has had an annus horribilis in 2007 as arch-rival Intel has been increasing its lead and market share in the microprocessor market.

Intel has been able to ramp up its processors' performance and has executed platform transitions flawlessly.

Many analysts however consider that the acquisition would be a non starter for IBM because the company has been disinvesting itself its hardware portfolio over the years.

Big blue sold its storage division to HGST, its printer branch to Ricoh and its Personal Computer and laptop division to Lenovo.

AMD would bring a number of interesting technologies onboard and provide IBM with more room for manoeuvre.

In July 2006, AMD merged with graphic chip producer ATI in a deal, valued at USD 5.4 bln, which pushed AMD's shares down.

IBM already has a microelectronics division which has produced processors in the past and worked on the PS3, Gamecube, Nintendo WII and the Xbox 360.