AMD Gives Up Its Share In GlobalFoundries 107
MrSeb writes "Three years ago today, AMD spun off its fab division, in a move the company claimed would allow it to more effectively leverage its assets, inject new capital into the foundry side of the business, and make it more competitive vis-à-vis Chipzilla. Today, that dream is dead. AMD announced today that it would give up its 8.8% equity stake in the company. When AMD created GlobalFoundries in 2009, the company held a 34.2% share in the foundry. The main thing that AMD gains from this deal is manufacturing flexibility. Previously, Sunnyvale had agreed to manufacture 28nm APUs solely with GlobalFoundries. This new agreement voids that arrangement, freeing AMD to work with TSMC and other foundries.. It's not an agreement that came cheap, though — not only is AMD giving up its 8.8% equity share of GF, it's agreed to pay the manufacturer some $425 million by the end of Q1 2013. AMD will take a $703M charge against the transaction. It's unclear how this move will pan out. We know AMD killed Krishna/Wichita due to manufacturing problems, Llano limped along for most of 2011, and GF's problems at 32nm impacted AMD's ability to sell 45nm chips into the channel. From a macroeconomic perspective, AMD is simply transferring its business to a foundry partner that's more able to meet its needs. One could argue that AMD's decision to get out of the foundry business is a logical extension of new-CEO Rory Read's plan to de-emphasize cutting-edge silicon in favor of SoCs. Time will tell."
Mixed news (Score:5, Insightful)
seems... weird. (Score:4, Insightful)
Hang in there, AMD. (Score:5, Insightful)
Re:AMD is dead (Score:3, Insightful)
Intel is faster per thread on the mid range too. What AMD has is they're cheap.
Re:Car Analogy Fail (Score:5, Insightful)
Your example of restaurants works. You just don't understand that it works because, as you say, you don't understand business. To be specific, you don't understand the purpose of a business when you see one. I'm guessing Hardees sells fried chicken... assuming they do, the proper analogy here is that you say Hardees owns their own string of chicken farms throughout the USA. Hardees decides that their thing is making food with a specific flavor, not keeping birds alive until they reach the proper weight to be dead birds that are tasty. So they create a new company, and put the chicken farms into that new company's name. Now Hardees has to only focus on applying breading and spice to raw chicken before deep-frying it to a lovely crisp, and can let the new company focus on how much corn to mix into chicken feed to produce the largest, healthiest chickens in the shortest amount of time while still fulfilling their contractual duties to provide so many pounds of chicken meat to Hardees every month.
Now say that the new chicken farming business isn't doing a good job of raising their chickens... they are too small and kinda chewy. Hardees doesn't want you to buy a chewy bird from them. They may loose you as a customer. So, Hardees says to the new chicken farming company, "you are your own business and are not performing up to our standards, so we shall take our business elsewhere". Hardees starts buying chicken from another chicken farm company. Now you go to Hardees and your neighbor goes to KFC. Guess what? KFC and Hardees both buy their chicken from the same company. You get home and enjoy Gary the Chicken, and your neighbor is enjoying Larry the Chicken, who is Gary's younger brother by 3 minutes.
You do not go to Hardees to get a specific chicken. You go to get a chicken that is safe, edible, and has a particular flavor that Hardees supplies with their blend of spices and/or choice of frying oil. This is what is happening with AMD right now. You buy a hunk of silicone that conforms to an AMD design, and meets certain standards and quality that AMD is guaranteeing you that the chip will have. Who made that silicone, for the most part, is irrelevant to the customer. That is AMD's problem. If they choose a manufacture that is slow, unreliable, or ships AMD lots of defective products, then AMD will take their business to a manufacture that is more competent or better suits their needs. So basically, AMD has decided that they want to focus on chip design, not both chip design and chip manufacturing.