AMD To Spin Off Fabrication From Design Work 153
I.M.O.G. was one of many readers to write with the news that "Advanced Micro Devices plans to announce Tuesday that it will split into two companies — one focused on designing microprocessors and the other on the costly business of manufacturing them — in a drastic effort to maintain its position as the only real rival to Intel. 'This is the biggest announcement in our history,' said AMD's chief executive, Dirk Meyer. 'This will make us a financially stronger company, both in the near term and in the long term, as a result of being out from the capital expense burden we have had to bear.'"
Re:How is this supposed to make things better? (Score:5, Informative)
There seems to be some good information here [wikipedia.org]:
IC production facilities are expensive to build and maintain. Unless they can be kept at nearly full utilization, they will become a drain on the finances of the company that owns them. The foundry model uses two methods to avoid these costs: Fabless companies avoid costs by not owning such facilities. Merchant foundries, on the other hand, find work from the worldwide pool of fabless companies, and by careful scheduling, pricing, and contracting keep their plants at full utilization.
Cost Accounting BS (Score:1, Informative)
The accountants and the lawyers at AMD at the behest of management, came up with this organization to allow for revenues, costs and subsequent profits to be booked in a much more favorable way. Has anything physically changed? Nope.
But! It's a good thing because it will allow AMD to look better to the numbnutzes on Wall Street and keep the share value for sliding into oblivion. It may also allow for the restructuring of any debt and other capital on the books. I think this reorganization may actually save jobs.
ARM is fabless (Score:5, Informative)
Because Design without Fab worked so well for Transmeta?
I see your sarcasm, but it works for ARM and MIPS.
Re:How is this supposed to make things better? (Score:3, Informative)
Re:How is this supposed to make things better? (Score:5, Informative)
It is NOT supposed to help AMD. It is supposed to help AMD's stockholders.
This often happens with troubled stocks that have a number of different business functions that can be split off. Some of those business functions may represent a great deal of capital investment, but not return much cash. You don't want that capital tied up in idle buildings and equipment, but you probably can't sell those things to your rival who's happy to see you shrivel up and blow away.
So you split the company up. The more profitable divisions can start to appreciate in value or even pay dividends. The less profitable business can stay afloat on business from its former sibling divisions while the stockholders unload their stock in it. It's possible that new management can turn thing around.
Re:How is this supposed to make things better? (Score:3, Informative)
Re:How is this supposed to make things better? (Score:2, Informative)
FUCK! I held on too long. My AMD stock has done well over the last 8 or so years. I knew that ATI acquisition smelled funny...
This happens when the profit margins of the company are not inline with what shareholders expect from a company in the particular field in question. The idea for the split is that the one company will be in the field in question, and have much higher margins (without the other division bringing them down). The other company, while still profitable, is now in a different field with different margin expectations. Now both companies can claim to be competitive in their respective fields. Thus, they are able to borrow more because their individual stock are rated higher. This happened to my last company that was in Aerospace and automotive at the same time. With aerospace being much more profitable, but automotive was still profitable, just not comparatively so.
Overall though I think its a failure to have to do this. Now I gotta find the right time to get out, which is probably not now.
Re:ARM is fabless (Score:3, Informative)
Re:How is this supposed to make things better? (Score:5, Informative)
Transmeta failed because its product sucked.
Re:How is this supposed to make things better? (Score:3, Informative)
This quick synopsis gives you some good info on why it helps AMD: http://www.pcper.com/comments.php?nid=6262 [pcper.com]
Re:Stick a fork in 'em... (Score:2, Informative)
I worked for Intel ATD Q&R in 2003 when the Itanium 2 died. It had nothing to do with AMD, and everything to do with problems inherent in the design. The Itanium 2 was failing all of the Q&R tests and was not performing up to the desired specs. That was why Intel killed the line.
Re:How is this supposed to make things better? (Score:3, Informative)
Re:How is this supposed to make things better? (Score:5, Informative)
Transmeta failed because its product sucked.
Absolutely. For those who don't know, the Crusoe uses a VLIW architecture with 128-bit words, and x86 instructions have to be decoded and RE-ORDERED in real-time into those 128-bit words. This is the same brick wall Intel ran into with optimizing compilers for the Itanium, but unlike Intel the Crusoe has to do it in REAL TIME.
Sure, the software translation layer meant that they could run Crusoe any architecture, but in the end it cost them precious performance. The chip itself wasn't much to sneeze at (two integer units and an anemic FPU), so it really didn't have the performance to spare. Then they hobbled the chip by integrating a nortbridge; this meant that ALL Crusoe-based systems would have the same video and I/O performance limitations, all in exchange for saving a buck or two on parts.
It didn't help that they hyped the successor, the Efficion, and then it didn't deliver in clock speeds or promised performance increases [vanshardware.com].