Nanotech - The Circuits Blog

The former CEO and chairman of Advanced Micro Devices, Hector Ruiz, has been linked to the Galleon insider-trading case, according to a report in the Wall Street Journal on Tuesday.

Hector Ruiz

(Credit: AMD)

This revelation comes after an unnamed executive at AMD was cited repeatedly in a complaint filed by the U.S. Attorney for New York's Southern District earlier this month.

The case revolves around Raj Rajaratnam, who founded the Galleon Group, a New York-based hedge fund that manages $7 billion in funds. Federal prosecutors charged Rajaratnam and five others with securities fraud, alleging they were involved in insider trading of well-known tech companies, including Intel, Google, AMD, and IBM.

"We are thoroughly reviewing the situation," AMD spokesperson Drew Prairie said. "We are not aware of any allegation of criminal misconduct on the part of any current or former AMD employees, nor have any current or former AMD employees been charged with a crime."

Ruiz is currently chairman of Globalfoundries, the chip manufacturing concern that was spun off from AMD in October of last year. A Globalfoundries spokesman had no comment.

AMD was prominent in the U.S. Attorney's complaint, which alleges Rajaratnam and others engaged in insider-trading activity when AMD was trying to reorganize and spin off its manufacturing operations last year--which eventually became a multibillion-dollar deal. The U.S. Attorney's complaint makes the first references to an AMD executive in June 2008. At that time, AMD, seeking a buyer for its manufacturing operations, entered into negotiations with investors based in Abu Dhabi.

As the announcement of the spin-off got closer, Danielle Chiesi, who worked for the New Castle hedge fund, is alleged to have said that "she had spoken with the AMD Executive, who told her that 'Wall Street will be shocked,' and that AMD will 'definitely make the announcement...before they print (quarterly earnings).'" Alan Kaufman, Chiesi's attorney, said his client would plead innocent to the charges.

The spin-off was ultimately announced on October 6 when an investment was secured from Advanced Technology Investment and Abu Dhabi-based Mubadala Development. At that time, AMD said the new company had secured about $5.7 billion of "confirmed, pledged investment."

Ruiz served as CEO and chairman of AMD until July 2008, when Dirk Meyer was appointed CEO. He remained as chairman of AMD until October when AMD's manufacturing operations were spun off. At that time, he become chairman of Globalfoundries.

Globalfoundries, the manufacturing concern spun off from Advanced Micro Devices, plans to announce Wednesday that it has signed up STMicroelectronics--its first true outside customer.

STMicroelectronics supplies the accelerometer for the iPhone 3GS

(Credit: Apple)

Globalfoundries was created last year in order to eliminate the crippling overhead that AMD was incurring to manufacture its processors. Globalfoundries now conducts business as a contract chip manufacturer, commonly referred to as a foundry.

AMD owns 34.2 percent of the company, while Advanced Technology Investment Co. owns the rest. ATIC is an investment company wholly owned by the government of Abu Dhabi, which is part of the United Arab Emirates.

Last week, Globalfoundries broke ground on a $4.2 billion facility in Malta, N.Y., that is expected to put it among the elite chipmakers of the world. Currently, Globalfoundries manufactures chips for AMD at facilities in Dresden, Germany.

STMicroelectronics will commission Globalfoundries to make low-power chips using a 40-nanometer process, which "is ideal for the next generation of wireless applications, handheld devices, and consumer electronics," according to a statement. Production is slated for 2010.

Currently, the most advanced manufacturing processes in the chip industry are at the 34-nanometer level--which Intel uses to manufacture flash memory chips. More typically, chips are made on advanced processes ranging between 40 and 50 nanometers. Generally, the smaller the chip's geometries, the faster and more power efficient it is.

Globalfoundries would not say what specific types of chips it will make for STMicroelectronics, whose product portfolio includes memory, microcontrollers, power management silicon, and MEMS or Micro-Electro-Mechanical Systems.

One of the highest profile products STMicroelectronics supplies today is the accelerometer for the iPhone 3GS. Based on MEMS technology, the accelerometer allows the 3GS to determine device orientation or inclination.

STMicroelectronics was ranked among the top 5 chipmakers in the world based on revenue in 2008, according to market researcher iSuppli.

Advanced Micro Devices' spinoff Globalfoundries will use a groundbreaking ceremony this Friday to proclaim that it's ready to go head to head with the world's largest chipmakers.

Globalfoundries, formerly the chip manufacturing operations of AMD, will break ground next week in Malta, N.Y., on a $4.2 billion facility that may put it among the elite chipmakers of the world. But to get there, it needs big customers. One--or more--of those names will be announced in the next 30 days, according to Jon Carvill, director of corporate communications at Globalfoundries.

Early customers may include companies that design low-power and wireless chips for the consumer electronics market. "There are a lot of benefits to being a significant player in that space," Carvill said.

Globalfoundries also has graphics chip companies in its sights. One large company cited as a potential future customer--though not necessarily among the first customers--is Nvidia, the No.1 graphics chip supplier. Nvidia's CEO, Jen-Hsun Huang, has already stated publicly that he is "seriously evaluating and discussing" the possibility of using Globalfoundries as a contract chip manufacturer, or so-called foundry.

An even more likely customer is ATI Technologies, AMD's graphics chip unit. Carvill said that Globalfoundries has "not run any volume (manufacturing) of AMD graphics processors...not yet," which may imply that there will be volume manufacturing at some point down the road.

Globalfoundries will compete aggressively for graphics chip business at the 28-nanometer manufacturing process level, which is still a few years away. Nvidia and ATI now use a 40-nanometer process in their most advanced graphics chips. Typically, the smaller the chip geometries, the faster and more power efficient the chip is.

It is no coincidence that both Nvidia and ATI currently use the world's largest contract chip manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC) as their foundry. Nvidia and ATI are the kind of elite client that Globalfoundries is looking to wrest away from TSMC. Graphics chip companies are typically among the first to move to a new manufacturing process because they need to pack as many transistors--now up to a billion--as possible into a chip in order to maintain a performance leg-up on the competition.

Globalfoundries may have an advantage here. "They (TSMC) don't have the advanced engineering that AMD does," said Dan Hutcheson, CEO and chairman of VLSI Research, a market researcher that covers the chip manufacturing industry, referring to Globalfoundries in its previous incarnation as AMD. And TSMC has been struggling with its 40-nanometer-class manufacturing process, providing an opportunity for Globalfoundries, according to Hutcheson.

But that doesn't mean it will be a cakewalk. "TSMC is incredibly cost effective and they're very quick at turning things around," Hutcheson said. "That's why they hold 60 to 70 percent of the market."

Why is a quick turnaround important? "If you're late to market, you lose most of your market share in a few weeks," according to Hutcheson. "A chip has to be designed into a socket that's going to go into some electronics product that's going to show up on shelves at Christmas. You can't delay Christmas," he said.

When the facility in Malta is completed and up and running by 2012, it should be among the world's most advanced chip plants. Globalfoundries' current plan is to get started on 28-nanometer technology in the second half of 2012 and then make a quick transition to 22-nanometer. Currently, the most advanced chips are manufactured on 40- and 45-nanometer processes. Intel, whose production is used strictly for its own products and therefore is not a contract chip manufacturer like Globalfoundries, is expected to transition--on a volume basis--to 32-nanometer late this year or early next year.

Joint work with IBM
Another advantage Globalfoundries will have over its competition is close cooperation with IBM, also one of the world's premier chip manufacturers. "That's one of the reasons it's being put there," Hutcheson said, referring to the Malta facility. IBM develops and manufactures chips in New York, with a lot of activity concentrated in East Fishkill.

Last month, Globalfoundries announced at the 2009 Symposium on VLSI Technology in Kyoto, Japan, that it is working with IBM on a technique that allows transistors to be scaled down below 22 nanometers.

And if there's any doubt about Globalfoundries' commitment to work with IBM, the headcount speaks for itself. A total of 70 Globalfoundries engineers work at IBM. "And that number is growing," Carvill said.

IBM, Samsung Electronics, STMicroelectronics, and others are teaming up on the development of next-generation chip technology for small, low-power devices with one wary eye on Intel, which is expediting its move to chips with smaller geometries.

(Credit: IBM)

IBM and its semiconductor technology alliance partners are announcing the availability of 28-nanometer (nm) chip technology, a little more than a generation beyond the 45nm technologies currently used by Intel and Advanced Micro Devices in their latest chips.

The first products using chips based on this technology are expected in the second half of 2010, an IBM spokesman said. Devices will include smartphones and consumer electronics products.

The largest, single countervailing force to the IBM-led group is Intel. The Santa Clara, Calif.-based chip giant's chief executive, Paul Otellini, said Tuesday in a first-quarter earnings conference call that Intel is "pulling in" the release of "Westmere" chips based on 32nm technology and will ship silicon later this year.

Generally, the smaller the geometry, the faster and more power efficient the chip is.

The IBM alliance--which also includes the AMD manufacturing spin-off Globalfoundries, Chartered Semiconductor, and Infineon Technologies--are jointly developing the 28nm chipmaking process based on the partners' "high-k metal gate" (which minimizes current leakage), low-power complementary metal oxide semiconductor (CMOS) process technology.

The technology "can provide a 40 percent performance improvement and a more than 20 percent reduction in power, in a chip that is half the size, compared with 45nm technology," IBM said in a statement. "These improvements enable microchip designs with outstanding performance, smaller feature sizes and low standby power, contributing to faster processing speed and longer battery life in next-generation mobile Internet devices and other systems."

IBM said customers can begin their designs now using 32nm technology and then transition to 28nm for density and power advantages without the need for a major redesign.

One prominent customer is U.K.-based ARM, whose basic chip design has been used in billions of devices all over the world. ARM is collaborating with the IBM alliance to develop a design platform for 32nm and 28nm technology and is tuning its Cortex processor family and future processors to exploit the technology's capabilities, IBM said.

Globalfoundries has named former Cypress Semiconductor executive Jim Kupec to its top marketing position, as the newly established company begins to assemble its executive team.

Globalfoundries is the chip manufacturing company recently formed by a joint venture between Advanced Micro Devices and Advanced Technology Investment Company (ATIC).

Kupec spent 15 years with Cypress Semiconductor, rising through a variety of engineering, operations, and management positions to the role of senior vice president, according to a statement from Globalfoundries.

After leaving Cypress, Kupec became president of United Microelectronics Co. (UMC) USA. Taiwan-based UMC is one of the largest contract chip manufacturers in the world and competes with Taiwan Semiconductor Manufacturing Co. Globalfoundries will compete with both of these companies for customers.

Most recently, Kupec served as chief operating officer of eSilicon, an ASIC (application-specific integrated circuit) design and manufacturing services company.

"The addition of Jim's extensive foundry experience, on both the supplier and customer side of the business, underscores our commitment to building a world-class global foundry services provider," said Doug Grose, CEO of Globalfoundries, in a statement.

In the wake of the latest kerfuffle between Advanced Micro Devices and Intel, AMD's chief counsel seized the moment to sound off on a primal fear at his company: Intel is bent on its destruction. Intel, of course, doesn't quite see it that way.

After Intel accused AMD on Monday of breaching a 2001 patent cross-license agreement with Intel, AMD's top lawyer had some choice words for its bigger rival.

In a phone interview Tuesday, AMD general counsel Harry Wolin refuted Intel's claim that the AMD manufacturing spin-off Globalfoundries is not a subsidiary--and thus cannot legally use Intel intellectual property--and talked more broadly about Intel's tactics.

Intel's ultimate goal, Wolin believes, is to crush rivals into oblivion. "In their perfect world, we wouldn't exist. If they had to deal with the government every now and then, that's fine, and they're still extracting monopoly profits from the industry," he said.

Wolin doesn't buy into the oft-repeated theory that Intel needs AMD to keep the industry honest and to keep the U.S. government at bay. "I don't agree with the premise that they have to have us and they think they have to have us. I think they would absolutely like us dead," Wolin said.

The Dickensian depiction of AMD as the impoverished, distressed victim of Intel's bullying and manipulation is inaccurate and, more importantly, misses the relevant point, according to Intel spokesman Chuck Mulloy. "It's nice of them to try to speak for us. AMD has been a competitor for almost 40 years in one form or another. This is not about AMD going away," he said. "This is about our rights and AMD's rights under the patent cross-license agreement."

Ashok Kumar, an analyst at investment bank Collins Stewart, said the premise of a remorselessly predatory Intel set on killing off its rivals is attention-getting but not that realistic.

"Could Intel put them out of business? Probably. But is it a likely outcome? I don't think so," he said. "Because they'll get a lot of significant push back from the OEMs (PC makers). The OEMs will essentially be making a beeline to Washington, D.C."

Intel contends this is a very localized dispute about whether Globalfoundries is a subsidiary or not, and not a manufactured issue "to distract the world from the global antitrust scrutiny (Intel) faces," as AMD said in a statement Monday. "AMD cannot unilaterally extend Intel's licensing rights to a third party without Intel's consent," said Bruce Sewell, senior vice president and general counsel for Intel, in a statement on Monday. Intel maintains the issue is that Globalfoundries is 34.2 percent owned by AMD and 65.8 percent-plus owned by Advanced Technology Investment Co., an investment company. So, in effect, Globalfoundries is not an AMD subsidiary.

Wrong, AMD says. It is not about ownership. AMD has met the conditions that qualify it as a subsidiary. "It requires that AMD originally contributed at least 50 percent of the assets. If you look at the fact that we've thrown in the German factories, we've thrown in the people, we've thrown in the technology, we've thrown in the intellectual property. I don't think there's any credible argument that says we haven't thrown in more than 50 percent of this. It says nothing about owning. It says you have to originally contribute 50 percent of the assets," Wolin said.

And what happens from here?

"Let's say the parties end up in a lawsuit at the end of 60 days," Wolin said. (Intel says it will terminate AMD's rights and licenses under the cross license in 60 days if the alleged breach has not been corrected.) "Well, you know, that lawsuit doesn't come to court for years and wouldn't come to court until well after the antitrust suit would come to court, which is currently scheduled for February of next year," according to Wolin.

Intel says the next step is mediation, where Globalfoundries is brought to the table. If this doesn't resolve the issue, then they would both be off to the races and the lawsuits would begin.

Advanced Micro Devices' former manufacturing operation, which was spun off recently by the chipmaker, launches on Wednesday as "Globalfoundries."

The new company is expected to make New York a hub of chip development and manufacturing.

Globalfoundries, which had been provisionally named The Foundry Company, is headed by Doug Grose, formerly senior vice president of manufacturing operations at AMD. Hector Ruiz, formerly AMD's chief executive, will become chairman of the board. It will be headquartered in Sunnyvale, Calif.

The breakup of AMD will present challenges from day one. AMD has become, essentially, a design house for chips.

"We will have to step back so we're respecting AMD as one customer of many," Grose said in a phone interview Tuesday. Grose said this won't be an entirely new experience for AMD, whose ATI graphics chip unit already has a longstanding foundry relationship with Taiwan Semiconductor Manufacturing Company (TSMC). "They already have that rigor and methodology in place," he said.

Although manufacturing will initially be centered in Dresden, Germany, the company plans to break ground on a $4.2 billion manufacturing facility at the Luther Forest Technology Campus in Saratoga County, N.Y., later this year. This is expected to cement existing R&D ties with IBM, which also has chip development and manufacturing bases in relative proximity to Saratoga County. Last year, AMD described this corridor in upstate New York as "one of the leading areas in the world for nanotechnology."

Grose said Globalfoundries has joined the "other side" of the IBM alliance, which is "industry-standard product." In short, though AMD previously had focused on high-performance PC processor-centric technologies, Globalfoundries will now focus on what is described as "bulk" chip technologies, "where the majority of the marketplace is," Grose said. "That's everything from consumer, handheld, wireless, up into graphics markets," he said.

Globalfoundries will target next-generation 32-nanometer and 28-nanometer manufacturing-process technologies as the "sweet spot for leading-edge customers," Grose said. The company's Dresden facilities are slated to begin 32-nanometer production next year. Output in New York is slated for 2012, focusing on 32-nanometer and smaller geometries, Gross said.

And whom, specifically, will Globalfoundries target as customers? "Look at the top 10 fabless companies, and you will get a pretty good cross-section of whom we have started to--or will talk to--very quickly," Grose said. Although Gross would not name names, top fabless companies include Qualcomm, Nvidia, SanDisk, and Broadcom.

AMD will own 34.2 percent of Globalfoundries, while the Advanced Technology Investment Co. will own the rest. ATIC is an investment company wholly owned by the government of Abu Dhabi, which is part of the United Arab Emirates.