AMD Breaks Ground on New Chip Facility

philthedrill writes "AMD announced that they have broken ground on Fab 36, which again will be located in Dresden, Germany. The 300 mm fab is expected to start volume production in 2006. There's more information at CBS MarketWatch." AMD will be moving from its current 200 mm wafer process, and looking to save money through the higher efficiency of the new process, as well as keep up with expected demand for their next generation processors. The MarketWatch article also contains some speculation about probable partners for AMD.

Comments

Cost of labor

[ziggyboy]

Wouldn't it be cheaper for them to put facilities that mass produce chips in countries where labor is cheap? Most Intel chips I've seen are marked "Made in Malaysia" or "Made in the Philippines."

Re:Cost of labor

[WIAKywbfatw]

I doubt they built a fab plant in Germany to keep down labour costs.

As an EU nation, Germany has employment rights that are a lot more stringent than in the US or South East Asia - we're talking about a higher minimum wage, a cap on weekly working hours, sick pay, maternity and paternity leave, pension contributions by the employer, favourable redundancy payments, etc.

More likely is that other economic factors - tax breaks, being inside the Euro zone, etc - were the deciding factors.

Re:Cost of labor

[Hoser McMoose]

As others have mentioned, Intel just has their chips packaged in Malaysia, the Philippines, etc. Similarly AMD has almost all of their chips packaged in Malaysia. FWIW most of Intel's actually chip fabs are in the US. Oregon to be exact. They also have a couple plants in Ireland and in Isreal. To the best of my knowledge they do not have any plants in south-east Asia.

In any case, here's a few numbers for you.. A typical plant these days costs about $2.5 billion dollars to build. Equipment in that plant is about another billion dollars and has a useful life of about 5 years if you can stretch it. The plant as a whole has a useful life of about 10 years before it needs a major overhaul.

So, simple bit of math tells us that you're looking at a fixed capital cost of somewhere around $4.5 billion. This gives you a rate of depresiation of roughly $1.2 million dollars a day.

Now, if you pay an average of $100,000/year to the ~1000 employees of the plant, you're looking at roughly $275,000 a day. As you can see, this isn't all that large of a number when you just compare it to depreciation, let along the (rather high) cost of electricity to keep the plant up and running and the huge cost of all the raw materials for producing and cleaning the chips. In short, your cost of labor is VERY low as a proportion of the whole business, but the quality of your employees has a VERY direct relation to the quality of the product (most importantly yields and speed bins) that is coming out of the fab.

Long story short, you REALLY want to place your fab where you can get skilled workers, not where labor is cheap.

Of course, the determining factor on where the fab is built is always which government gives the best grants and loans to build the fab.

Re:What feature size?

[glassesmonkey]

The feature size is independant of the fab tooling. AMD will implement the smallest affordable feature size at the time the fab comes on line and most likely will be running two feature sizes. Depending on who is making their chips in two years (probably IBM) they will most likely use the same masks and try to get matching silicon up to production levels.

The fab is mostly just the facility (shake proof bldg, class 1, 10, 100, etc, wafer handling). What goes into the fab is the latest equiptment. That equipment will support multiple generations of lithography.

Oh, come on.

[raygundan]

Nobody opposes freedom for Iraqis. Some people, however, think that maybe we should have kept on with the diplomacy a bit longer before sending in troops. Who is right? I don't know. At the very least, it's fairly expensive international-relations suicide to go invading stuff on your own without the help of the UN. But suggesting that because they do not advocate war, Germany opposes freedom for Iraqis is ridiculous.

Re:A question for the industry people:

[Dastardly]

See my earlier post. US companies are not for the most part moving FABs to Asia. Mostly packaging and final test. I go through the reasons for it, but it basically boils down to packaged processors are about 10x as bulky as the die on a wafer. Therefore, it takes about 10x the labor just to move them to and from the package line or test equipment.