AMD Acquires Nitero For High-Speed Virtual Reality Chip Tech – Seeking Alpha

Quick Take

Graphics chip maker AMD (AMD) has acquired the team and technology of fabless semiconductor company Nitero for an undisclosed amount. Nitero has been developing millimeter frequency solutions for wireless virtual reality [VR] and augmented reality [AR] headsets.

AMD has acquired the IP to bolster its ambitions in the promising VR/AR market, which has yet to see widespread consumer adoption. I dont expect any near-term effect as a result of the deal since the technology will take some time to integrate and continue development within AMDs design goals.

Target Company

Austin, Texas-based Nitero was founded in 2009 by CEO Pat Kelly to develop low-power 60 GHz solutions to enable high bandwidth wireless headsets for VR and AR applications.

In July 2014, Nitero introduced its NT4600 family of IEEE 802.11ad smartphone chips using Samsungs (OTC:SSNLF) 28nm RF process. The NT4600 line supported 4K displays, USB 3.0 data rate wireless connectivity and transmit and receive beamforming to provide better coverage.

As founder and CEO Pat Kelly stated,

Todays smartphones and tablets have incredible processing and graphical power. However, these capabilities are bottled up due to the lack of robust wireless display connectivity. 60GHz allows our phones to reach their full potential, without requiring a power cord to keep the battery alive. With the NT4600, I can walk around a conference room while my smartphone drives a presentation at the office. Once home, it can wirelessly connect to my 4K TV to play the latest first person shooter without having to be recharged.

Kelly was previously CEO of Sironics and VP at SigmaTels portable SoC Group. Below is a brief demonstration video about Niteros wireless VR solution:

(Source: UploadVR)

Nitero raised at least $4.71 million in disclosed early stage financing from venture capital investors Southern Cross Venture Partners (Larry Marshall), Trailblazer Capital (Joel Fontenot & George Barber) and Austin Ventures (Clark Jernigan).

Acquisition Terms, Rationale and Commentary

AMD did not disclose the price it paid for Nitero, so it was likely not material to AMD and was primarily a team and technology acquisition. Nitero CEO Kelly is now Corporate Vice President, Wireless IP at AMD in Austin, where it has a significant operations presence.

AMD acquired Nitero because it believes that for widespread adoption of VR to occur, unwieldy headset cables that attach to a PC have to go away. With 60GHz wireless connectivity, the promise of a cable-free VR/AR headset with multi-gigabit transmit performance and low-latency comes closer to reality.

In recent years, AMD has changed its focus, from PC-based chipsets to mobile and graphics-oriented products. Its no wonder, since the growth potential has been much greater ex-PC due to consumer demand and display technology advances.

AMDs move into gaming and VR/AR applications will receive another boost with the deal for Nitero, as AMD gains additional IP it needs to become a leader in the nascent VR/AR segment. VR/AR has been threatening to go mainstream, but there has been as yet no killer system to drive consumer adoption. Perhaps a 60GHz system like Niteros will do the trick.

I write about M&A deals and IPOs. Click the Follow button next to my name at the top of this article if you want to receive future articles automatically.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

See more here:

AMD Acquires Nitero For High-Speed Virtual Reality Chip Tech - Seeking Alpha