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.'"
How is this supposed to make things better? (Score:3, Interesting)
Can someone give me some insight into why splitting the company into two is supposed to help AMD?
Re:How is this supposed to make things better? (Score:2, Interesting)
Precedent (Score:1, Interesting)
Maybe they think it will work out as wildly successful as it has for a company like, say, USR/Palm.
IMO, it's time to start short selling them.
Re:How is this supposed to make things better? (Score:5, Interesting)
I think this will turn out well for AMD, if they can maintain a good relationship with their foundry spin off and if the foundry spin off can keep up with the competition in terms of quality and technology. Although, I guess this would also free AMD to find other partners if they need to either expand production or find better production facilities in the future without neglecting parts of their own business.
Re:How is this supposed to make things better? (Score:1, Interesting)
So they can shift money back and forth by charging one another for services and products. Great tax shelter and yes I say shelter not evasion, there is a difference.
Stick a fork in 'em... (Score:4, Interesting)
Stick a fork in AMD, they're done.
A design firm plus a foundry does not equal an integrated semiconductor powerhouse.
Who is left to compete with Intel now? At least we will have Nehalem. Get used to Nehalem, embrace it, love it. Because it's going to be around for a long, long time. At least we have the x86-64 ISA, on-board memory controller, and point-to-point processor communications as an AMD legacy. And thank $DEITY that AMD was able to put a stake through the heart of Itanium.
There won't be much future innovation from Intel without the spur of aggressive competition from AMD.
Cheers!
Abu Dhabi Investment Group (Score:5, Interesting)
Re:why didn't they provide the bailout? (Score:3, Interesting)
How better to help with financial bailout than to make a big company stay profitable instead of laying off highly skilled workers?
It's a smoke screen for mismanagement (Score:4, Interesting)
A hot fab is useless unless you can get product to market, and sell into the markets you need to achieve sales goals. AMD hasn't done this.
While they have very good engineers, they're weak in so many places. An infusion of foreign capital makes no sense if you can't get the basics right.
Yes, Intel, IMHO, used illegal tactics to kill AMD at many turns. AMD needs to recruit the best and brightest and get a regime change in motion to diffuse their preyed-upon attitude. They could lead again, but not with the current regime.
Chopping the company into bits will be a distraction, not a savior.
ATI, nVidia (Score:3, Interesting)
ATI contracted out their fabrication in the past, correct? Since AMD acquired them, perhaps they now realize this might work for their x86 stuff. Disclaimer: I have absolutely no expertise in this area.
Re:Wow, AMD going fab-less... (Score:3, Interesting)
If you have followed AMD for some time (and I have - I lived in Dresden for two years), you would know all the troubles associated with building a fan now.
For its first fab, AMD could pull it mostly on its own. Still there were some other parties in the deal. For seconds fab in Dresden it was much much more complicated: further improvements in manufacturing processes made fabs more expensive. $2Bln is quite number for smallish company like AMD to pull. And finding partners is quite hard, because many wouldn't like that AMD sits on two chairs and getting guarantees that your product will not stall somewhere in AMD's fab pipeline, preempted by urgent work for AMD itself (to compete with no less Intel itself), is impossible. Thus finding partners for new fab is very hard for monolithic AMD.
Short term it would of course suck. Bureaucracy and communication of design details can easily introduce unwanted delays.
In long term it would also suck. Competing with Intel which has dozen of fabs would be very hard. New manufacturing processes would be harder to sync with CPUs road map.
But that's of course much better than sitting with the fabs on your balance sheet: they quickly loose relevance and need to be scrapped and rebuild literally completely anew. And the old manufacturing process is not that really old and irrelevant: it is old for CPUs and GPUs (due to competitive pressure from Nvidia and Intel), yet can be used for bunch of other products. e.g. Xbox only recently went to 65nm, while ATI's 48x0 GPU family already enjoys 55nm process.
Beginning of the end of exponential growth (Score:3, Interesting)
I read that Gordon Moore once explained his "Moore's law" as being economic, not technical. He said that when Intel builds a new plant, each new plant costs about twice as much as the last one. so he said at some point a plant will cost more money then there is on earth so they will have to stop buiding new plants at some point and then Moore's law will end. I think what we are seeing is the front end of this. A few smaller companies are finding they can build new fab plants. Maybe in 20 year even Intel will have to do what AMD is doing and then we will see the end of exponential growth.
The key observation here was by Gordon Moore that growth in the number of transisters is due to growth in capital spending on fab plants, not technology.
Re:How is this supposed to make things better? (Score:1, Interesting)
This kind of idiocy never goes well for the foundry, just ask the vendors that GM spun off.
Re:How is this supposed to make things better? (Score:3, Interesting)
I foresee a different future for AMD. I have a feeling that they're restructuring themselves to be a big ATi, which was a fabless "silicon design" company. There are plenty of competent and cheap foundries for silicon. The costs of duplicating the engineering work of others is weighing heavily on AMD, since their primary rival can outspend them by such a huge margin. It seems to me that they're betting on the survival of AMD intellectual property by having their competent engineers design stuff that's fabbed in Taiwan.
I might be wrong and maybe they have enough confidence in their process tech that they want to scale up their manufacture beyond the demand of their own processors and GPUs, but I don't think so. AMD GPUs are already fabbed in Taiwan. Despite the huge investment in process tech made by AMD, this is still worth their while. That makes me think that they're regretting their huge investment in process tech, and aren't feeling up to the challenge of spending the dough to stay competitive with the big boys.
Re:How is this supposed to make things better? (Score:3, Interesting)
AMD is maintaining a minority interest - the Foundry Company has a 55% majority on the spunoff part.
My understanding is that while it's only 45% of the stock, not all stock is equal and AMD is keeping a majority of the voting rights.
Nothing to do with AMD? (Score:3, Interesting)
Um. You do realize that Intel had no intention of ever extending x86 arch to 64-bits, right?
And that the plan was to force anyone who needed more that 4GB of address space or eight 32-bit registers to migrate to Itanium?
And that Intel had strong-armed or bluffed all competing RISC vendors (except Sun) into abandoning their 64-bit CPUs based on Intel's plans for an entire Itanium 'ecosystem'?
And that they had the entire IT press eating out of their hands, blathering on about the bright inescapable future of Itanium everywhere for about four straight years?
And that Intel didn't really care about cost, price-performance, power consumption, or other customer-centric innovations whatsoever?
No, Intel had all their plans laid out, and nothing would stand in their way. It was their way (Itanium) or the highway.
And then AMD put the Hammer down. The debut of the Opteron in 2003 was the beginning of the end of Itanium. AMD's intense competitive streak, while not always profitable, certainly altered the entire x86 ecosystem away from 'legacy' status, and sidelined Itanium into a niche player that any smaller manufacturer would have dropped years ago.
So yes, I think the whole IT world owes AMD a huge debt of gratitude for nipping Itanium in the bud. And for creating a vibrant, competitive market that otherwise would have stagnated under the sway of a single monopolistic vendor.
So like I said before, who will keep Intel honest now that AMD has applied King Solomon's solution [wikipedia.org] to itself?
Cheers!
Re:How is this supposed to make things better? (Score:3, Interesting)
Or maybe, since AMD have been using IBM's process technology for a while now, but there's been a delay in integrating that process into their own fabs, they think they can come to an agreement with IBM to use IBM's leading edge fabs.
It would make a lot of sense. IBM gets to run their high end fabs at higher capacity with a product that doesn't really compete with IBM's Power-based products, but which competes with one of IBM's biggest potential competitors (Intel). They also won't have to risk more anti-trust suits by buying out AMD to keep Intel in check on the low end. Otherwise, with a free rein on the low end, Intel could raise its margins to fund an attack against IBM on the high end. AMD gets access to leading edge fabs without needing to find the capital investment, something particularly important given the credit crunch.
Given Dirk Meyer's background in chip design, as opposed to process, this doesn't surprise me too much. However I think the credit crunch and the ability to get credit for the next round of fab upgrades is the big factor that left AMD with little choice. This kind of deal must have been brewing for months, but the credit crunch is what made it imperative. Intel and IBM have the cash reserves to self-finance fab upgrades but AMD would have had to go to the capital markets and pay too much interest, if they could anything at all. AMD is taking a bit of a chance that IBM would continue to give them continued access to their fabs, but Intel isn't going away any time soon and "the enemy of my enemy"... should keep them friendly for the next decade, or at least until the financial markets stabilize and credit becomes more easily available again.
So yeah, I expect the announcement of a big fabbing agreement between Intel and AMD sometime in the next 6 months.
Re:How is this supposed to make things better? (Score:3, Interesting)
On the flip side the foundry is considerably more advanced than AMD is using right now. AMD has not been selling enough chips to fill up their fab. By freeing the fab, it will allow other companies, particularly after the Nvidia chip fiasco, to manufacturer without fear AMD might poach their chip designs. I think that's the motivation. In order to meet Intel and IBM on the fab front, they have to invest in billion dollar factories.