The future of AMD's asset-light manufacturing strategy remained detail-light Thursday.
There's been lots of speculation about AMD's manufacturing plans this year as the company has posted heavy losses, and it has intensified since CEO Hector Ruiz made comments about possible changes to the company's strategy on its first-quarter earnings conference call.
But AMD hasn't shared any plans about its future mix of manufacturing capacity during neither its second-quarter earnings call earlier this month, nor Thursday's technology analyst meeting. Doug Grose, senior vice president at AMD in charge of manufacturing, reiterated that "asset light" does not mean dumping all of AMD's chip plants and embracing the fabless model, in which chip foundries like Taiwan Semiconductor Manufacturing, United Microelectronics and Chartered would make the company's processors and chipsets. But he did not provide any guidance about whether AMD would increase the percentage of third-party foundries it uses to make chips, acknowledging that "I know that a lot of us wanted to hear a lot more details today on asset light."
The problem is simple: modern chipmaking factories cost a hell of a lot to build. And with AMD's losses this year, the company is scaling back its ambitions to a certain degree. It plans to slow the conversion of an older facility in Germany to newer chip-making equipment, and it has until 2009 to decide whether to go through with plans to build an advanced fab in upstate New York.
Some aspects of an asset-light strategy are already in place. Right now, AMD has an arrangement with Chartered to build processors, and uses TSMC and UMC to make some of its graphics chips. It also has a partnership with IBM to share the cost of advanced research and development into making sure it can continue to produce more powerful transistors.
But financial analysts have wondered whether the company plans to make greater use of those partners in the future, especially on the manufacturing side, to reduce its cost structure. But Grose and other AMD executives aren't showing their cards just yet, citing "competitive reasons."
Grose did talk a little about AMD's plans for upcoming manufacturing technology transitions. AMD is on track to introduce chips built on its 45-nanometer technology in the middle of 2008. But it appears AMD isn't going to use the metal gate technology unveiled with great fanfare by IBM earlier this year on its first generation of 45-nanometer chips, waiting instead until either the second iteration of 45-nanometer chips or the first generation of its 32-nanometer chips, Grose said.
Grose did touch on the complexity that will be involved when AMD is ready to build its Fusion processor. Fusion is a combination PC processor and graphics processor, and right now those two products use different manufacturing technologies. In 2009, AMD will have to figure out how to blend those technologies with its mix of manufacturing partners, and that will be "very interesting," he said.