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AMD:=20 Keeping Competition Alive

Posted by: Stephen Wildstrom on October 07

3DAMD_logo_us-en.gif=20
Advanced Micro Devices=E2=80=99 announcement that it = is spinning=20 out its chip fabrication operations to a new Abu Dhabi-financed company = is good=20 news for the future of competition in the processor and graphics chips=20 businesses. AMD has a lot of advanced manufacturing technology, some of = it=20 courtesy of a technology sharing arrangement with IBM and a = state-of-the-art=20 chip fab in Dresden, Germany. But it could never come close to matching = its much=20 larger rival, Intel, in manufacturing efficiency. AMD was slowly, or not = so=20 slowly, being crushed by the capital cost and debt burden imposed by its = manufacturing operations.

As industry analyst Roger Kay of Endpoint Technologies Associates = notes: =E2=80=9CAMD=20 gets to lower its fixed costs, making it profitable at a lower level of = revenue,=20 and it can still participate in leading-edge technology development. It = gets out=20 from under some of its debt and receives a cash infusion from a patient = source.=20 The bonus: it gets to participate in an entirely new business, a foundry = that=20 takes in knitting from other fabless semi companies. AMD sweated this = deal for a=20 long time. It wanted to enter into, not just any partnership, but the = right=20 partnership. Certainly, Samsung and other large semi companies would = have been=20 happy to have a captive processor and graphics company in the stable, = but AMD=20 wanted to continue doing what it does best: developing computer innards. = By=20 moving in this direction, the company positions itself well in both its = existing=20 business and a whole new future business.=E2=80=9D

TrackBack URL for this entry: = http://blogs.businessweek.com/mt/mt-tb.cgi/

Reader Comments

Kevin

October 7, 2008 02:27 PM

AMD Chips, at least at one point, ran 12% faster than Intel at the = same speed=20 rating.

Wallace Eastman

October 7, 2008 02:30 PM

I have not had a computer with an Intel chip since my 40Mhz AT. AMD = has=20 performed well in all my machines since.

Eric Henry

October 7, 2008 02:38 PM

A better explaination of this was found here:=20 http://benchmarkreviews.com/index.php?option=3Dcom_content&task=3Dvie= w&id=3D5504&Itemid=3D47

aw

October 7, 2008 02:45 PM

I would rather have intel buy up amd (even at the cost of = competition) than=20 some terrorist controlling it.

Ladder

October 7, 2008 02:59 PM

And what of all the jobs here in the U.S. that will be lost due to = them being=20 exported over seas? AMD has become just another big corporation that = apparently=20 cares nothing about the well being of its own country.

Steve Wildstrom

October 7, 2008 03:22 PM

@Ladder
I don;t think there any reason to expect substantial loss = of U.S.=20 jobs. First, chip fabrication requires vast amounts of capital but is so = highly=20 automated that relatively few people are employed in a fab. In fact, fab = engineers regard humans primarily as sources of contamination and the = fewer of=20 htem there are around, the better. Second, AMD's primary manufacturing = facility=20 is in Germany. The high-value chip design functions will stay with AMD = in Austin=20 and Silicon Valley.

Abu bin-Chip

October 7, 2008 03:35 PM

Abu Dhabi may know camel chips, but they sure as Hades don't know = caca-mecca=20 about processors. The term "Empty Quarter" refers not only to the = geographical=20 site, but also to the 8th quarter (and counting) of AMD's major losses. = AMD, the=20 all-mecca-device.

Kyle York

October 7, 2008 03:52 PM

Steve et al-

I live here in Northern New York State where AMD has promised...on a=20 handshake...to build $3.2 billion dollar chip fab plant. The state has = promised=20 a nice incentive package of 1.6 billion IFFFF they break ground in July = 2009.=20 So, do y'all think we'll have a BOOMING July Fourth or will it fizzle=20 out?

Zandora

October 7, 2008 08:08 PM

The ignorance of some people is amazing. To label Abu-Dhabi as = "terrorist" is=20 silly. You don't know squat, not everything in the middle east is = anti-american=20 or anti-capitalism, and lumping it all as "mecca" is quite absurd. This = deal=20 represents some of the oil dollars that we have sent overseas coming = back to the=20 USA. And to the Intel fanboys, just remember that if AMD didn't exist, = you would=20 all be running Itanic processors and emulating x86 today, paying 2-5x as = much=20 for processors that consisted of what Intel thinks is good for = themselves (as=20 opposed to its customers). You might also remember that Conroe/Core2 was = a=20 design that came from Israel, not the US.

Roger Kay

October 8, 2008 05:50 PM

Eric Henry, thanks for the pointer. His review was quite complete, = but mine=20 was shorter. ;)

Roger L. Kay

About

BusinessWeek writers Peter = Burrows, Cliff = Edwards, Steve Hamm, = Rob Hof, Olga = Kharif, Steve = Wildstrom, Aaron = Ricadela,=20 and Spencer = Ante=20 dig behind the headlines to analyze what=E2=80=99s really happening = throughout the world=20 of technology. One of the first mainstream media tech blogs, Tech Beat = covers=20 everything from tech bellwethers like Apple, Google, and Intel and = emerging new=20 leaders such as Facebook to new technologies, trends, and = controversies.

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