AMD finds 'fabless' alternative
Advanced Micro Devices appears to have found an alternative to going fabless.
The dramatic announcement by AMD Tuesday, which focuses on a new entity known for now as The Foundry Company, shows that there is another way to restructure that doesn't entail completely jettisoning manufacturing operations--referred to in the semiconductor industry as fabs or fabrication facilities.
"Real men have fabs." This quote attributed to former AMD CEO and Chairman Jerry Sanders has some import here. Though fabless concerns, such as Nvidia, have been held up as lean, mean chip-supplying machines that don't have the burden of funding costly manufacturing facilities, the downside is often ignored by Wall Street.
Going completely fabless separates the company from key process technologies that are needed to stay ahead. That's especially true in AMD's case, where the sole processor rival is chip behemoth Intel, which derives much of its strength by moving quickly from one chip manufacturing process to another. Going to a new manufacturing process typically results in faster, more power-efficient processors.
This artist's rendering shows what AMD expects its New York facility to look like when it opens for business about three to four years from now.
(Credit: AMD)Look no further than the state AMD finds itself in today. It is a generation behind Intel, which has been shipping chips based on the 45-nanometer process for almost year. AMD is currently struggling to get out its first generation of 45nm processors.
The newly created Foundry Company was described by AMD Chief Executive Dirk Meyer on Tuesday as a "brand-new and leading-edge semiconductor manufacturing company." It will be run by Doug Grose, who will relinquish his current role as AMD's senior vice president of manufacturing operations to become CEO of The Foundry Company.
Two things will happen as a result of the backing by the Abu Dhabi-based investors. First, AMD, through the joint company Advanced Technology Investment Co. (ATIC), will expand its current manufacturing facilities in Dresden, Germany, and transform this into a foundry company that also builds chips for other companies.
As part of this expansion, Dresden will bring in IBM's silicon-on-insulator (SOI) and so-called "bulk silicon" technologies. "We deepen and widen our relationship with IBM," AMD said Tuesday. "So we'll be able to take bulk and SOI together to the 22-nanometer generation and beyond." (The next generation of chips will be made on a 32-nanometer process, followed by 22-nanometer in the 2012 time frame.)
AMD's Fab 36 in Dresden will focus on IBM's silicon-on-insulator (SOI) and so-called "bulk silicon" technologies.
(Credit: AMD)Second, AMD will move forward to build manufacturing facilities at the Luther Forest Technology Campus, near the town of Malta, N.Y. "At the earliest opportunity we will break ground on upstate New York and begin work on what we believe will be the most sophisticated manufacturing facility in the United States," AMD said.
The intention is to "bring that fab online in the late 2011, 2012 time frame," AMD said. "And further cementing that upstate New York corridor as one of the leading (areas) in the world for nanotechnology." The planned facility will provide 1,400 jobs for the region, according to AMD.
AMD may also expand beyond Dresden and New York. "Once we complete the Dresden expansion and build out upstate New York--and if commercially justified--we will consider the creation of research and manufacturing facilities in Abu Dhabi," said Grose.
Hector Ruiz--the current AMD chairman--will relinquish his role as AMD's executive chairman to become chairman of The Foundry Company.
Brooke Crothers has served as an editor at large at CNET News, an editor at Dow Jones' Asian Wall Street Journal Weekly, and a senior editor at InfoWorld. His CNET blog covers chip technology and computer systems, and how they define the computing experience. He also contributes to The New York Times' Bits and Technology sections. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. Follow Brooke on Twitter @mbrookec. 
Sure, ARM and the like are fabless, but they're not competing directly against Intel in the x86 market. Intel can pull it off because they have a tight design and manufacturing energy, and can keep their fabs humming along at full capacity.
AMD has probably had a very rough time of it with keeping their fabs going full-tilt (which is the only way you can actually make a profit on running the things), and having to schedule fab-time with third-party design houses is going to be a screamer.
Kinda sad, really - AMD once had a drop-powerful answer when the Opteron came out, and Intel had nothing to answer it with for years (Intel basically flopped around with HT and "EE" and Xeons, but couldn't touch the Opteron for what - two to three years?) ...then the Core Duo came out. AMD should have used the time they had to continuously find new and more powerful chips, but they let the chance slip through their fingers... it would've been very interesting to see a real 4+ core answer (and not the stupid 3-core critter), or better yet - an earlier integrated CPU+GPU solution... but it's like they had a corporate brain-seizure or something.
/P
(disclosure - I have worked for Intel in the past).
As what? The security guard? Oh wait, maybe you're some line tech? OOOOOOH. Your comments reveal how little knowledge you actually have towards semiconductor design and manufacturing.
AMD did lose the debt, yes - but they also lost the fabs. The last x86 clone corp to give it a shot fabless was Transmeta, and they didn't do so well. Sure AMD has the name and some momentum still, but damn...
@3tire: Whatever, kid. I only state my affiliations past and present to remove any appearance of fanboyism or astroturfing (unlike a lot of the MSFT-employed commenters in here...)
/P
1.) AMD will use The Foundry fabs to produce both AMD and ATI chips without incurring the costs of operating those fabs nor the cost of expansion. Those fabs will be expanded to build chips for others in addition to AMD.
2.) This deal gives AMD an enormous injection of cash that will fund research and development as well as reduce their operating debt (1.2 billion of debt will now be gone from the books).
This is a great move for AMD and will allow them to kick goth Intel and NVidia's tails all over the school yard while actually making a profit doing it. As of 2:50pm today, AMD's stock has risen 11.47%. That isn't an earth shattering gain, but at a time of economic downturn, a good deal that injects cash into such a company while also providing them with flexibility shows confidence in the company, the product, and the company's management.
Saw the boss on CNBC and he said the upstate NY facility would add like 14000 new jobs.
Thats also good for America`s economy. Yay AMD !
- by Travler_121 October 9, 2008 4:05 PM PDT
- I think that AMD has truly made a great decision to bring in outside cash in order to survive...and NY will certainly gain in so many ways. However, one thing that scares me in this setup is that Ruiz will now head up The Foundry. He showed little to no leadership to capitalize on the MPU market when the Opteron device was introduced, so why would I think he would show anything more now?
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