Linked by David Adams on Fri 12th Sep 2008 16:30 UTC, submitted by irbis
AMD AMD plans to spin off its chip manufacturing operations by year's end, probably by hawking them outright or by inking a partnership with a larger chipmaker -- a maneuver akin to selling a house and leasing it back. Meyer is vague on the exact timing of a deal, but he knows it's probably the best thing the company can do quickly to improve its financial position, and its reputation with investors. A successful transaction would see AMD pocket a good chunk of cash, while handing manufacturing to a company that can better keep pace with Intel's world-class operations.
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A better model...
by TemporalBeing on Fri 12th Sep 2008 17:29 UTC
Member since:

Well...selling of the fabs might raise revenue now, but could put AMD in a bind in the long term since they would be fully reliant on outside providers for their core business. A better model would be to hirer additional capacity in the proposed manner and keep the current capacity - thus enabling delivery sooner but not making the company dependent on external sources.

Things tend to go cyclically too - one generation likes everything in-house, another wants it all out-sourced. Unfortunately, this is not one of those decisions you could make lightly - it'll be very hard (and extremely expensive) to bring it back in-house. So it's an success-or-die approach.

Wish more business execs had better common sense, logic, etc. Sad to see AMD do this though.

Reply Score: 2

RE: A better model...
by Liquidator on Sat 13th Sep 2008 08:56 UTC in reply to "A better model..."
Liquidator Member since:

Over the last few years I have always bought AMD CPUs because they are quality, affordable and most of all to contribute maintaining healthy competition. I hope the recent decisions don't allow Intel to be the king and raise their prices...

Reply Score: 3

RE: A better model...
by Adurbe on Mon 15th Sep 2008 12:31 UTC in reply to "A better model..."
Adurbe Member since:

While they had this inhouse, they are forced to use their own fabs, even if they are not the best option.

By seperating that part of the biz they can now use any manufacturer they wish, be it IBM, Freescale or anyone else! (I doubt they will use intel fabs, at least in the short term!)

Reply Score: 2

You know who has great fabs?
by qortra on Fri 12th Sep 2008 19:22 UTC
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Intel. Plus, Intel has a great reason to make sure that AMD survives; they want to avoid antitrust legislation. Now that Apple switched to Intel from the G5, there are only two companies left in the desktop processor realm (discounting VIA's sliver of marketshare). Does anybody remember Microsoft's investment in Apple more than a decade ago?

I don't honestly think that would happen, but it does make sense in a twisted kind of way. There aren't that many companies in the world with the fabrication experience and capital necessary to handle server and desktop processors. Clearly, AMD's people are having a difficult time with it, so merely spinning the fabrication department off into a new company on it's own won't work.

Reply Score: 1 Member since:

As I recall TI Cyrix and few others tried to compete with Intel during the 486 hey day.. not one except
AMD managed to hold on... NEC tried but unsucessful
in bringing their version to market.

AMD is already has moved and will continue to operations out of SV to better compete with Intel.
I think they will survive but need to zero in on their
market niche and share. Maybe focus on high end or laptops onlys. But not both... they dont have the
bandwith to compete with intel in all markets.
Too costly!

Reply Score: 1

PunchCardGuy Member since:

So who will churn out AMD's chips if they sell off their Fabs? CPU chip manufacturers push the technology envelope more than manufacturers of other chips. So who does that leave? Really, only INTEL and IBM. Third party Fabs like TMSC can't really play in this league. All in all, this move would really be a shame, not only because it might mean the immanent demise of AMD as a viable competitor to INTEL in the CPU space, but because AMD is part of the "old-guard" of chip manufacturers. They were making CPUs before INTEL was - any one remember the 2901 bit-slice CPUs they made that were the core of many minicomputers back in the day?

Reply Score: 2

It works so well...
by rdean400 on Fri 12th Sep 2008 21:31 UTC
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Palm did so well splitting off PalmSource.

The old-but-post-antitrust-breakup AT&T did so well splitting up into multiple businesses.

Reply Score: 0

RE: It works so well...
by tyrione on Sat 13th Sep 2008 00:28 UTC in reply to "It works so well..."
tyrione Member since:

Palm did so well splitting off PalmSource.

The old-but-post-antitrust-breakup AT&T did so well splitting up into multiple businesses.

Of course. We had 12 and now down to like 4 crappy Phone service providers.

Unless these carriers are required to compete, within the same region against the dozen other providers you've essentially maintained the monopoly on a region by region basis.

Reply Score: 3

Say Goodnight, AMD
by bannor99 on Sat 13th Sep 2008 04:55 UTC
Member since:

If they sell of their fabs, they are DEAD, DEAD, DEAD.
As a previous poster said, they need to engage 3rd parties for extra capacity to keep up with Chipzilla.

But to sell the keys to the kingdom and then try to rent space? Not a good idea.

And who makes the ATI components?

Reply Score: 1

RE: Say Goodnight, AMD
by sbergman27 on Sat 13th Sep 2008 05:36 UTC in reply to "Say Goodnight, AMD"
sbergman27 Member since:

Which is a shame because it means higher prices and lower performance than we consumers would have otherwise. Competition with AMD got us our core 2's for the prices we paid for them.

Reply Score: 3

RE[2]: Say Goodnight, AMD
by bannor99 on Sat 13th Sep 2008 06:47 UTC in reply to "RE: Say Goodnight, AMD"
bannor99 Member since:

Believe me, the last thing I want to see is AMD go under
or even drop a notch. They are Intel's only competition
and without AMD, we will, as you say, be paying through
the nose for our CPUs.

I've bought AMD before and my last CPU purchases were AMD
Athlon 64 X2. The last time I bought Intel was over ten years ago when I built a dual-proc rig based on Pentium IIs.
At the time, AMD had no consumer multiprocessor support.
I know Intel holds the high ground right now but AMD is good enough for me - their price/performance ratio suits my budget and I don't need the ultimate fastest CPUs for what I do.

Reply Score: 3

risky manoeuvre
by dwave on Sun 14th Sep 2008 21:58 UTC
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A fab is not something that you can out-source easily. Process and quality control are some of the top issues to ensure an efficient yield and engineers have to work in close teams whenever new processes are involved. For AMD this is a highly risky manoeuvre and I assume it has only gotten green light after carefully weighing in all possibilities, all options and the obvious graveness of AMD's current situation.
For the sake of a healthy competition I really hope they have thought this through and it's not just a desperate last move, before descending into irrelevance. All options seem to be on the table now.

Reply Score: 1