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One-on-one: AMD foundry exec deals with the issues

Posted: 15 Oct 2008 ?? ?Print Version ?Bookmark and Share

Keywords:foundry spin off? Doug Grose CEO? Intel?

Grose: We have a perfect window of opportunity because the leading-edge companies are now starting to think about how to take new products into 32nm.

The success of Advanced Micro Devices Inc.'s bold plan to spin off its capital-intensive semiconductor manufacturing operations rests on the shoulders of Doug Grose, a 20-year IC industry veteran and former executive with IBM Corp. systems and technology group.

Since the announcement of the planned spin-off last week (Oct. 8), Grose has monitored industry reaction, some of it bullish about AMD's prospects. But much of the industry's response to AMD's joint venture deal with Abu Dhabi's government was skeptical, with some industry observers reluctant to endorse the new Foundry Co. while others doubted whether the new entity can compete in a market dominated by Taiwan Semiconductor Manufacturing Co. Ltd.

Concerns also were expressed about how the new Foundry Co., which Grose is expected to head as CEO, would deal with the potentially fractious issue of intellectual property agreements and cross-licensing between AMD and rival Intel Corp. In fact, some observers assert that Intel could derail AMD's plans if the two companies were unable to resolve issues related to their IP licensing relationship.

Grose addressed some of these issues in an interview with EE Times, explained that the new foundry has a plan for dealing with the IP licensing issue. Grose declined to elaborate.

The CEO-designate also said the new AMD joint venture with Abu Dhabi's Advanced Technology Investment Co. is already looking to beef up its customer roster by pursuing members of IBM's process technology alliance. AMD executives understand they face challenges, but the opportunities available in the outsourced wafer market far outweigh the problems, Grose said.

Below are excerpts from our interview with Grose:

What was wrong with AMD's old manufacturing model?
Clearly the amount of capital required to stay at the leading edge of semiconductor process capability as well as produce the capacity needed for the large volume of microprocessor from an AMD standpoint is a large draw on the financial position of AMD.

This foundry company is a natural evolution if you think about what has been happening in the semiconductor industry over the last 10 to 15 years. The IDMs are migrating away from producing their own technology, going into partnerships as we have and also exiting building their own fabs. And so the foundry market continues to be a very attractive one for companies who want to focus their investment around the design, the architecture, as AMD will, and really leverage their investment differently.

AMD is going to be the only customer of the Foundry Co. initially. What is the potential for attracting other customers?
The Foundry Co.'s role would be first and foremost to service AMD and its products, but our role would in parallel be to develop the capability such that we would attract third-party customers. We want to build leading-edge capability, capacity and the design enablement environment in order to support them. In the next one to two years, we will be working heavily on building out those elements with a focus on third-party customers.

What are you going to be focusing on in terms of technology and marketing?
We have expanded our relationship into the IBM ecosystem, so first and foremost our focus will be on 32nm and going out to the top 10 customers to go after their design[s]. We have a perfect window of opportunity because the leading-edge companies are now starting to think about how to take new products into 32nm.

Timing-wise, the opportunity is here. We want to work with IBM and its alliance partners who are several of the top fabless design companies to try to win their business.

On the internal side, we've got to expand what we do for AMD, which is the design enablement piece. We've got to build the sales and marketing capability for a foundry company. That's the challenge and the opportunity. Since the news has been out, we've been getting a lot of excitement and a lot of interest from potential customers.

One criticism of your plan is that you may not have enough resources to fund capital requirement.
When we start formally, AMD and ATIC of Abu Dhabi will be our parents. AMD will have the option of investing or not investing in the future capacity requirement of the Foundry Co. Our other parent has committed to source the needed capital as the business plan evolves and as we become successful economically. We have what is needed for our initial business plan.

How are you going to handle the IP requirements?
Much of that is available in the external world from third parties, and we've already set up what we think we need. But most importantly, we are itching to get out to start our discussion with potential customers so we can specifically understand their requirements. We are set up from an investment standpoint to go and get that IP capability and provide that as a service for our customers. Many customers, especially the larger ones, don't necessarily require IP support because they do a lot of these themselves.

What are the opportunities and challenges you see ahead for the Foundry Co. and how do you plan to address them?
The opportunities far outweigh what we have from a challenge standpoint. The opportunities are to serve an available market that is growing and which we believe will continue to grow based on events in the last 15 years in the industry. Companies are seeking a choice in the foundry business, especially a choice in leading-edge capabilities so that their capacity needs could be met.

The challenges are intertwined, and they include building our fab capability in Dresden, Germany, and building a new state of the art semiconductor plant in New York and bringing that online as quickly as we can. We also have the challenge of servicing the customers from the IP and design enablement angles.

It's a challenge, but there are also great opportunities in front of us.

- Bolaji Ojo
EE Times

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