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Commentary: What will happen to AMD's assets?

Posted: 12 Aug 2008 ?? ?Print Version ?Bookmark and Share

Keywords:processors? MPU? IC? manufacturing?

After some time, Advanced Micro Devices Inc. (AMD) has been open about its asset-lite efforts, without giving the full details of its plans. Earlier reports claimed AMD can no longer keep up with Intel Corp. in IC manufacturing, pushing the troubled MPU vendor to devise a new fab-lite or fabless strategy to concentrate on design.

However, AMD's steady leaks about its asset-lite plans are getting tiresome. By the time AMD announces its asset-lite strategy, will anyone care?

The public won't care. AMD's customers might. Its foundry partners are certainly paying close attention. Chartered Semiconductor Manufacturing Pte. Ltd is handling some foundry businesses for AMD. This is hard to believe that Chartered's volumes are large for AMD. Meanwhile, Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) is making devices for AMD's graphics chip unit, ATI Technologies.

AMD's spin-off
In the future, AMD plans to split the company into two. It will possibly spin out its manufacturing unit, turning AMD into a design house.

The manufacturing spin-off may take ownership of AMD's fabs, especially its leading-edge plant in Dresden, Germany. Reports said AMD will also have its parts assembled on a foundry basis by Chartered, TSMC and possibly United Microelectronics Corp.

However, some sources are saying otherwise. TSMC is anticipated to get the lion's share of AMD's foundry business with Chartered looking in from the outside, according to one source. Another source said Chartered may produce some of AMD's products, while many of the latter's key parts assemblies have migrated to TSMC's fabs.

The challenge at hand
Whatever the case may be, the strategy is risky. Evidence is thinning that a foundry can keep up with the high-volume processor production against Intel. Foundries can make processors, but they have typically worked with small, third-tier suppliers over the years. Competing with Intel is another story.

Meanwhile, there's a possibility that the strategy will succeed. By the time AMD makes its asset-lite announcement and based on the company's recent execution, the processor vendor may have lost what's left to its prestige and become a second-tier or third-tier player. Probably, it will not be a third-tier player, but will fight to stay relevant in the business.

- Mark LaPedus
EE Times

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