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AMD The Almighty Buck Hardware

AMD Receives $683M for Dresden Plant 277

Posted by CowboyNeal from the chips-of-the-future dept.
Cocooner writes "Infoworld has an article explaining how AMD received $683 million in grants from Germany and the state of Saxony for its next-generation microprocessor wafer facility. The new plant will be located in Dresden, adjacent to Fab 30 and will be called Fab 36. It will be the first AMD 300mm manufacturing facility."
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AMD Receives $683M for Dresden Plant More

AMD Receives $683M for Dresden Plant

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  • ROI? (Score:5, Insightful)

    by Ralph Wiggam ( 22354 ) * on Saturday February 07, 2004 @11:34AM (#8211555) Homepage
    "The new Dresden facility ... will employ 1,000 local workers when it is completed"

    Why would the government give a $683M break to AMD to get 1000 jobs? That's two thirds of a million bucks per job. It's amazing that a $2B facility can be staffed by only 1000 people.

    -B

    • Re:ROI? (Score:5, Insightful)

      by Xeth ( 614132 ) on Saturday February 07, 2004 @11:37AM (#8211573) Journal
      That may seem initially true, but there are bound to me massive general economic effects from employing 1000 highly skilled workers and their families, and all the increased support business that would come up around them.
      • How much do bunny suit wearers earn, anyway? Is a Ph.D required?
        • The fewer employees a plant has, the more highly skilled they need to be. In a non-automated plant there are many more employees, and they are for the most part unskilled. But in a highly automated plant all the unskilled jobs are replaced by the automation. The jobs that are left are the highly skilled ones, like maintaining and programming the automation.

          So these jobs may not require a Ph.D, but they are highly skilled non-the-less.

      • Re:ROI? (Score:3, Interesting)

        by rif42 ( 206260 )
        employing 1000 highly skilled workers

        Most of these jobs will likely not need to have much special skills, chip fab work is in some way just another form of assembly line work. I guess it is at most 200 of them that needs to be highly skilled.

        Other than that I think your argument of an ecomony knock-off effect do hold.

    • Re:ROI? (Score:5, Insightful)

      by MadAnthony02 ( 626886 ) on Saturday February 07, 2004 @11:39AM (#8211586)

      Why would the government give a $683M break to AMD to get 1000 jobs? That's two thirds of a million bucks per job.

      Well, first of all it's in grants and allowances, so the governemnt probably doesn't look at it as "real money" - and I'm guessing it's probably spread out over a long period of time, ie tax breaks for the next x years.

      Secondly, they are probably figuring that the plant will make suppliers and customers of AMD move nearby, thus providing more jobs and taxes. It's debateable if this actually works, but that's probably their thought process.

      • Re:ROI? (Score:5, Interesting)

        by davegust ( 624570 ) <gustafson@ieee.org> on Saturday February 07, 2004 @12:07PM (#8211720)

        they are probably figuring that the plant will make suppliers and customers of AMD move nearby

        Wafer fabs usually spend a relatively small amount of money in local economies. The bulk of the cost of a new fab is allocated to new equipment, which is mostly imported from the U.S. and Japan.

        Still, there are the 1000 local permanent jobs, local jobs for construction of the actual building, money spent by equipment vendors support personnel in hotels, local costs for water and power, and local taxes.

        A fun anecdote regarding water consumption: I write software for wet benches. I shipped a bug once to a fab in Phoenix that caused their DI water consumption to skyocket. The fab's DI water plant hit max capacity, and the City of Chandler had problems keeping up with the plant's consumption.

        Here in Boise, local philanthropist J.R. Simplot built the city a park with a dozen or so soccer fields. The real purpose behind this park - a place to distribute processed waste water from the Micron plant. Not that I have any problem with that.

      • That could be the process, but my guess is that this is the process instead (and it is a political process, not a "thought" process):

        AMD is a big company with money to spend (not bribes, but you know how it works). Being a single company, they also present a unified front for negotiations. The local government (or federal, I don't know with this deal) has few motivations to look unfavorably on AMD's requests.

        On the other hand, income tax payers, sales tax payers, and property tax payers, do not have
    • I assume the chips produced at the new plant would generate tax revenue too.

      Dan East

      • Re:Taxes... (Score:2, Informative)

        by Sumocide ( 114549 )
        Dream on, corporations of their size hardly have to pay taxes in Germany. Especially in the former GDR.

        • Re:Taxes... (Score:3, Interesting)

          by he-sk ( 103163 )
          That's right! Thanks to our center-left government, German Telekom (you know, T-Mobile) und Siemens (as in Fujitsu-Siemens) pay less in taxes than the janitors working there. And this is just the tip of the iceberg. Hurra to the forces of a free marked economy!

          • Re:Taxes... (Score:3, Flamebait)

            by spike hay ( 534165 )
            Just be glad that they are easy on corporations. The German economy is headed for a slow, eventual decline due to deep seated structural problems. It will wind up much like Japan. Taxes are too high, and that discourages investment. Productivity isn't that high.

            Worse, to help offset the massive government debt, there is talk about raising pension contributions and corporate taxes. These will hurt the economy further, making the country less competitive and decreasing investment.

            Germany is falling into a t

    • Re:ROI? (Score:2, Interesting)

      by matze235 ( 568521 )
      I have to agree. This is even more disappointing as the government is cutting social funds. Here in Berlin they are cutting the low-priced metro ticket for people with low income, investments in culture and education, etc.

      The economy lobbyists have such a strong influence on politics.. that's really sad.
      • The economy lobbyists have such a strong influence on politics.. that's really sad.

        That will always be true IMO. Just like how space and time cannot be seperated and hence is called spacetime, you cannot seperate politics and economics. That's why I call it econopolitics.

        I can see why people like to seperate them. Over 90% of the world is capitalist. And capitalism is a purely economic system (whereas most other systems are economics+politics). So it might seem that you can seperate them. But in re

    • That's nothing... (Score:5, Funny)

      by Dan East ( 318230 ) on Saturday February 07, 2004 @11:45AM (#8211617) Journal
      Just look at how many people work at the International Space Station.

      Dan East

    • Re:ROI? (Score:4, Interesting)

      by HungWeiLo ( 250320 ) on Saturday February 07, 2004 @12:18PM (#8211773)
      I apologize for not being able to answer your question. I live in the US, you see. I am not familiar with the concept of government incentives and payments in exchange for favors from the corporate sector. Not only that - I live in a state [wa.gov] which will give 2+ billion US, free training to their workers, freeway expansion around their facilities, and a free cargo dock to our favorite corporate entity [boeing.com] in exchange for 1,200 jobs. But since our state government knows best, it must be done because it has a tremendous ROI.

      • Re:ROI? (Score:3, Interesting)

        by spike hay ( 534165 )
        But since our state government knows best, it must be done because it has a tremendous ROI.

        I too, live in Washington State. We have one of the worst tax climates for businesses in the country, hence Boeing's eagerness to relocate. Basically, we taxed the living hell out of Boeing. When they decidided they wanted to move, the state government gave them ridiculous incentives to get them to stay. But, it was basically too late anyway. Many of the jobs have already relocated to Chicago and Kansas. We'll just
      • The best part about the whole deal is the Governor is now proposing a $1B/year sales tax increase. Gee, thanks Locke, I'm glad you gave all that money to a company who let go tens of thousands of workers!

    • Re:ROI? (Score:4, Insightful)

      by christophe ( 36267 ) on Saturday February 07, 2004 @12:38PM (#8211872) Journal
      >Why would the government give a $683M break to >AMD to get 1000 jobs? That's two thirds of a >million bucks per job. It's amazing that a $2B >facility can be staffed by only 1000 people

      Germans don't care about the 1000 people working there, they care about:
      - the other $1.4B that will come and will be spent in Germany for a good part,
      - the thousands people needed to build a high-tech plant,
      - the hundreds of firms and thousands people needed to provide (high tech) "raw" materials, and provide outsourced services to the plant (food, cleaning, software, maintenance, tools...) : do not forget that Germans are good at making tools and chemical products (which such a plant really need),
      - the money that will go through their banks,
      - the fact that this part of country really need jobs (previous Eastern Germany, 20% unemployment).

      BTW: If you have an opportunity to visit this part of Germany, do no hesitate. Dresedn was totally destroyed in February 1945, but the Communists really succeeded in building it again [about their only success], and the area is very nice.

    • Possibly illegal too (Score:3, Interesting)

      by sql*kitten ( 1359 ) *
      Why would the government give a $683M break to AMD to get 1000 jobs?

      The EU recently decided that it was illegal [bbc.co.uk] for local governments to subsidise private companies to do business in their region. Could be that AMD haven't quite thought this through...

      • Re:Possibly illegal too (Score:2, Informative)

        by jarran ( 91204 )
        Governments can, in certain circumstances get permission from the EU for state aid to companies. (Not that I have any idea what those circumstances are. :) )

    • IBM [ibm.com] does a similar thing in New York. This [ibm.com] is another interesting link.

    • Nice to see corporate welfare doesn't just happen in the good ol' U.S...

      I wonder what the millions of folks in the rest of Germany think about their tax money going to a mutlinational corporation just to build one plant with a thousand jobs? If they're like Americans, as long as they can fight over same sex marriage and the National Endowment for the Arts, they probably don't even notice.

    • Re:ROI? (Score:3, Insightful)

      by gr8_phk ( 621180 )
      Remember, a large portion of that money will go straight into the local economy. Construction will be done by local companies. Only the special equipment will come from outside, and most of that will be purchased with other money. I bet most of the money will be spent locally, and when it's done, they'll have a nice new fab in town.

  • Avoid production stop (Score:3, Insightful)

    by rif42 ( 206260 ) on Saturday February 07, 2004 @11:44AM (#8211606)
    AMD, based in Sunnyvale, California, has no plans to convert its existing Dresden fab to 300 millimeters because it wouldn't be a cost-effective way to introduce that technology, Prairie said.

    Probably also because it would for a longer time block the main production facility for Athlon and Optoron chips.

    If you have many fabs doing the same kind of chip process like Intel it is much easier to temporary stop one of them.

  • What about returns ?? (Score:3, Interesting)

    by shamir_k ( 222154 ) on Saturday February 07, 2004 @11:46AM (#8211621) Homepage

    How much new revenues will this new plant bring into Dresden? 600 million plus seems an awful lot of money to get just 1000 additional jobs.

    Unless the city going to get substantial revenues from taxes, or increased business opportunities for vendors, it seems like a huge waste of money.

    • Re:What about returns ?? (Score:5, Insightful)

      by tempfile ( 528337 ) on Saturday February 07, 2004 @12:33PM (#8211845)
      Eastern Germany suffers from extreme unemployment (up to 20% in some areas) and has been in an economical crisis since the wall came down. The unemployment is the reason for the collapsing German welfare state.

      Creating jobs and building an industry should be the #1 East German priority. The government did the right thing.

  • Socialistic contradiction of Free Trade. (Score:2, Interesting)

    by Anonymous Coward
    This is goverment intervention of the free markets.
    This is a threat to Globalism!

    The period between 1950 and 1973 was by far the most successful of the century. This was an era characterised by capital controls, fixed exchange rates, strong trade unions, a large public sector and a general acceptance of government's role in demand management. The average annual growth in "per capita real GDP" throughout the world was 2.9% - precisely twice as high as the average rate in the two decades since then.
    • where it was one of the worst economic periods in history (on the tail end at least). One of the only times in US history where you had stagflation - inflation coupled with high unemployment and sagging GDP.

  • think back! (Score:5, Insightful)

    by Anonymous Coward on Saturday February 07, 2004 @11:56AM (#8211666)
    "...AMD received $683 million in grants from Germany and the state of Saxony for its next-generation microprocessor wafer facility."

    it's not like AMD is gonna change the money into
    euro coins and stack them to make a nice looking
    factory made from coins, no sir.

    the question really is:
    who owned the land before AMD bought it (tax?).
    who is building the factory(tax?).
    who is supplying power(tax?).
    who is building the generators that produce
    the needed electricity(tax?).
    who gets to have a peek at the technology (know-how) once complet(no tax!) :)
    who gets know-how for building a chip
    producing factory? (def. more to come!)
    etc.

    this is a micro investment and the reward is def.
    going to pay off as long as people have to use
    computers (e.g. no telepathy available).
    • this is a micro investment and the reward is def. going to pay off

      Micro investment? A micro investment is when you give $50 to a woman in bangladesh so that she can start her own business. Giving $683 million to a major corporation looks pretty damn macro to me. You are probably right that it will pay off for Germany and Saxony though. Having the factory there will generate a lot of taxable economic activity.

    • Re:think back! (Score:3, Interesting)

      by michael_cain ( 66650 )

      this is a micro investment and the reward is def. going to pay off as long as people have to use computers

      Sometimes these things work out, sometimes they don't. There is a growing body of evidence in the US that cutting sweetheart deals to bring in some corporate facility can be a losing proposition. This one seems of a managable size, but in cases of large facilities employing thousands, there can be serious ripple effects as the local governments must build new roads, new schools, expand water trea

  • In other news.... (Score:2, Funny)

    by Anonymous Coward
    The German VP of AMD was assaulted by President Schroeder who, according tohis own explanation, was "trying to kiss his boots".

  • Ever notice (Score:2, Flamebait)

    by cubicledrone ( 681598 )
    How there are never stories titled:

    "Huge new manufacturing facility to be constructed in $US_STATE?"

    or

    "$BLOATED_CORPORATION to hire 12,000 new workers?"

    • It's rarely remarkable (Score:5, Insightful)

      by Duhavid ( 677874 ) on Saturday February 07, 2004 @12:34PM (#8211852)
      when a US company builds a US factory.

      In the same way it would not be remarkable when a German company built a German factory, nor when an Indian company built an Indian factory.

      It is a bit more remarkable when the US business drones without brains build another facility outside the US, then complain that US consumers arent buying it's products. Everyone is worried about the "jobless recovery", but they fail to point the fingers at themselves for shipping the jobs ( and salaries ) overseas. Mind you, I am not nessesarily of the "protectionist" mindset, but it does seem that some moderation is called for.
    • There are, you just don't see them.

      For instance, huge news in Buffalo recently: Geico is going to build a big regional center, 2500 jobs within a few years, plus other peripheral development.

      Sure, "insurance" isn't as sexy as "chip manufacturing", but hey, they're jobs, aren't they?

    • go to any city's paper and look in the local sections. Specifically look for articles containing "tax increment financing" or "TIF" (not the image format). This type of financing is an art form in the US.
    • How there are never stories titled:

      "Huge new manufacturing facility to be constructed in $US_STATE?"

      Most of us don't care. They come and they go, but as a counterexample, KEZI TV in Eugene, Oregon, had a top news story not a week ago about Intel's announcment that it was building a new fab in Oregon.

      Just because it's not on Slashdot doesn't mean it isn't happening. I'd suggest you don't use Slashdot as your only news source, or you will suffer permanent brain damage.

  • Fab 36 (Score:5, Funny)

    by VanillaCoke420 ( 662576 ) <.vanillacoke420. .at. .hotmail.com.> on Saturday February 07, 2004 @12:13PM (#8211749)
    So will 36 trendy gay men decorate the factory and have the workers wear something stylish?

  • Advancements are a wonderful thing (Score:3, Interesting)

    by locutus2k ( 103517 ) on Saturday February 07, 2004 @12:19PM (#8211781)
    It is nice to see AMD expanding its company. I have been using AMD chips for several years now, and couldn't be happier. When a company spends the time and money to make developments in arcitecture, they should get something nice in return. Unfortunatly I don't feel intel has been making the advances. The Intel name has been carrying them for a while now, and its time AMD got their recognition.

    I've been using the Athlon64 chips and couldn't be happier. Hopefully the new plant will help them nibble away another part of Intel's market share.

  • wafer size (Score:5, Informative)

    by Elracim ( 660617 ) <burnt@egg.gmail@com> on Saturday February 07, 2004 @12:20PM (#8211784)
    This page explains the difference between wafer sizes pretty well.

    www.tomshardware.com/cpu/20040201/prescott-05.html [tomshardware.com]

  • Well (Score:2, Interesting)

    by Anonymous Coward
    I live in the North of England, and at least the AMD plant is still around and AMD is a German company, unlike the white elephant of Siemens.

  • Glad they got a plant, (Score:3, Interesting)

    by Archfeld ( 6757 ) * <treboreel@live.com> on Saturday February 07, 2004 @01:02PM (#8212019) Journal
    even happier it was not near me..Horrible places that produce huge amounts of heinous sand some really AWFUL smells.

  • Did nobody else do a double take? (Score:5, Funny)

    by surprise_audit ( 575743 ) on Saturday February 07, 2004 @01:10PM (#8212080)
    article explaining how AMD received $683 million in grants from Germany and the state of Saxony

    I swear, the first time read that I thought it said AMD was being given the state of Saxony along with a pile of cash... Shouldn't be reading this stuff after working through the night, I guess... :)

  • Wow. (Score:2)

    by Zebra_X ( 13249 )
    Considering that is almost half the cost of such a plant, it is really going to help AMD's chip costs. Perhaps we will see affordable FX class CPU's.

  • Good for the city (Score:5, Interesting)

    by giminy ( 94188 ) on Saturday February 07, 2004 @02:23PM (#8212571) Homepage Journal
    I lived in Dresden last year, and things haven't been too wonderful there since reunification. Lots of people have been leaving the city to head west, where there are better jobs. The city of Dresden actually pays people 300,- just to move there from other parts of the country (I think some other cities in the eastern part of the country do this as well). That money will easily cover the first month of rent in most areas of the city -- everybody I met would pay about 150,- per month.

    That said, this will certainly help bring a little more 'balance' to the country (the Dresden VW plant also helps). 1000 high-paying jobs means potentially 1000 families...lots of little kids that need schoolteachers, food, clothes. I'm sure that the AMD plant will bring in way more money than this in taxes after a few years anyway...

  • Old news, and they got more (Score:3, Informative)

    by Rufus211 ( 221883 ) <rufus-slashdotNO@SPAMhackish.org> on Saturday February 07, 2004 @02:45PM (#8212804) Homepage
    Wow this is old news. We knew this when they first announced [xbitlabs.com] the plant. And here are some more figures:
    AMD has arranged external financing and government support of approximately $1.5 billion during that period. The external financing is expected to include up to approximately $700 million in loans from a consortium of banks, including an 80% residual guarantee from Germany and Saxony, approximately $500 million in anticipated grants and allowances from the Germany and Saxonian governments (pending European Union Commission approval), and up to approximately $320 million in equity funding from Saxony and a group of European investors led by M+W Zander.
  • As soon as I saw the first thing I thought of was Hyundai/Hynix and some of the other Enterprise Zone projects started in Oregon in the mid-late 1990's.

    The Enterprise Zones were areas designated for industrial development that would receive special tax breaks for the first five years or so. It looked really good on paper, and politicians could say they were doing something about the high unemployment, which looked really good to them.

    The two biggest projects were a CD-pressing plant owned by Sony in

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