AMD Receives $683M for Dresden Plant

Cocooner writes "Infoworld has an article explaining how AMD received $683 million in grants from Germany and the state of Saxony for its next-generation microprocessor wafer facility. The new plant will be located in Dresden, adjacent to Fab 30 and will be called Fab 36. It will be the first AMD 300mm manufacturing facility."

Comments

ROI?

[Ralph Wiggam]

"The new Dresden facility ... will employ 1,000 local workers when it is completed"

Why would the government give a $683M break to AMD to get 1000 jobs? That's two thirds of a million bucks per job. It's amazing that a $2B facility can be staffed by only 1000 people.

-B

Re:ROI?

[Xeth]

That may seem initially true, but there are bound to me massive general economic effects from employing 1000 highly skilled workers and their families, and all the increased support business that would come up around them.

Re:ROI?

[MadAnthony02]

Why would the government give a $683M break to AMD to get 1000 jobs? That's two thirds of a million bucks per job.

Well, first of all it's in grants and allowances, so the governemnt probably doesn't look at it as "real money" - and I'm guessing it's probably spread out over a long period of time, ie tax breaks for the next x years.

Secondly, they are probably figuring that the plant will make suppliers and customers of AMD move nearby, thus providing more jobs and taxes. It's debateable if this actually works, but that's probably their thought process.

Re:ROI?

[rif42]

employing 1000 highly skilled workers

Most of these jobs will likely not need to have much special skills, chip fab work is in some way just another form of assembly line work. I guess it is at most 200 of them that needs to be highly skilled.

Other than that I think your argument of an ecomony knock-off effect do hold.

Re:ROI?

[davegust]

they are probably figuring that the plant will make suppliers and customers of AMD move nearby

Wafer fabs usually spend a relatively small amount of money in local economies. The bulk of the cost of a new fab is allocated to new equipment, which is mostly imported from the U.S. and Japan.

Still, there are the 1000 local permanent jobs, local jobs for construction of the actual building, money spent by equipment vendors support personnel in hotels, local costs for water and power, and local taxes.

A fun anecdote regarding water consumption: I write software for wet benches. I shipped a bug once to a fab in Phoenix that caused their DI water consumption to skyocket. The fab's DI water plant hit max capacity, and the City of Chandler had problems keeping up with the plant's consumption.

Here in Boise, local philanthropist J.R. Simplot built the city a park with a dozen or so soccer fields. The real purpose behind this park - a place to distribute processed waste water from the Micron plant. Not that I have any problem with that.

Re:ROI?

[sjwt]

no, but the other 2billion Euro's that AMD is spending will stay in the german ecconomy..

So the govermnet spends 600millon,
to put a total of 2.5 billion in the ecconomy.

you are right, its not 1 becomes 2,
its 1 becomes 4.

Re:ROI?

[HungWeiLo]

I apologize for not being able to answer your question. I live in the US, you see. I am not familiar with the concept of government incentives and payments in exchange for favors from the corporate sector. Not only that - I live in a state which will give 2+ billion US, free training to their workers, freeway expansion around their facilities, and a free cargo dock to our favorite corporate entity in exchange for 1,200 jobs. But since our state government knows best, it must be done because it has a tremendous ROI.

Re:ROI?

[christophe]

>Why would the government give a $683M break to >AMD to get 1000 jobs? That's two thirds of a >million bucks per job. It's amazing that a $2B >facility can be staffed by only 1000 people

Germans don't care about the 1000 people working there, they care about:
- the other $1.4B that will come and will be spent in Germany for a good part,
- the thousands people needed to build a high-tech plant,
- the hundreds of firms and thousands people needed to provide (high tech) "raw" materials, and provide outsourced services to the plant (food, cleaning, software, maintenance, tools...) : do not forget that Germans are good at making tools and chemical products (which such a plant really need),
- the money that will go through their banks,
- the fact that this part of country really need jobs (previous Eastern Germany, 20% unemployment).

BTW: If you have an opportunity to visit this part of Germany, do no hesitate. Dresedn was totally destroyed in February 1945, but the Communists really succeeded in building it again [about their only success], and the area is very nice.

Re:ROI?

[I Be Hatin']

Not really, let's say they're each making 50k. 50 million a year. It stays 50 million a year, no matter how many people become the beneficiaries. Money isn't magical, one euro doesn't magically become two because another business moves into the neighborhood in order to serve the workers.

And what do they do with that 50 million a year? Stuff it under their mattresses? No, they spend it in the local economy, buying food, clothes, etc. for their families... and the local government gets a cut via the sales tax. Further, this increased spending on necessities and luxuries of life spawns the need for new workers, who receive a paycheck... and the government gets a cut via the income tax. And with this money, they spend it in the local economy... and the local government gets a cut via the sales tax. And so forth. So yes, money is magical as far as the government is concerned, since they get a cut out of any transaction.

Now, the above assumes that all new workers have to move to Dresden from other areas. But the same statements are true if the new workers are local residents who are receiving a lower salary (in which case it's less than 50 million, of course) or unemployed, which actually doubles the benefit, as they're no longer receiving public assistance.

Re:ROI?

[Uber Banker]

No. You must be unaware of the 'multiplier effect' in economics, you can read up here. Basically, if there is surplus productive capacity in a economy (which Germany surely has) a stimulative effect at employing that surplus will have spill over benefit to everyone (chip makers need bakers, burger flippers etc) economically 'near' them. The money goes round the economic circle and multiplies.

As Germany is in a depressed economic position (lots of deflationary pressures) such fiscal stimulus is useful (this was the argument for the Bush tax cuts - but that was probably unnecessary in the US (and was not 'directed' to undercapacity areas of the economy), but is much more necessary in Germany), not that this is a cure-all as German is suffering really bad structural problems too.

Then there is the money multiplier concept (a not very good definition here) which explains how money increases as the definition broadens - is cash money, but the amount of money on deposit is greater than all cash in circulation and in bank tills This is a seperate issue and not relevant to this discussion, but a fine demonstation that of all things in life, money is one ofthe finest examples of something which multiplies.

Re:AMD 300mm?

[scifience]

No, it isn't a typo. They are talking about the size of the silicon wafer, not the processor itself. If you had RTFA, you would have known that the whole point of this is that is more cost effective to use bigger silicon wafers since more processors can then be made out of a single wafer.

Re:AMD 300mm?

[garethw]

I know, it's a typo...

Actually, it isn't. 300mm is the diamaeter of a complete wafer, from which multiple die are cut.

Avoid production stop

[rif42]

AMD, based in Sunnyvale, California, has no plans to convert its existing Dresden fab to 300 millimeters because it wouldn't be a cost-effective way to introduce that technology, Prairie said.

Probably also because it would for a longer time block the main production facility for Athlon and Optoron chips.

If you have many fabs doing the same kind of chip process like Intel it is much easier to temporary stop one of them.

That's nothing...

[Dan East]

Just look at how many people work at the International Space Station.

Dan East

Re:That's nothing...

[EggplantMan]

Not only that, but those jobs sure as hell ain't local.

What about returns ??

[shamir_k]

How much new revenues will this new plant bring into Dresden? 600 million plus seems an awful lot of money to get just 1000 additional jobs.

Unless the city going to get substantial revenues from taxes, or increased business opportunities for vendors, it seems like a huge waste of money.

Re:What about returns ??

[tempfile]

Eastern Germany suffers from extreme unemployment (up to 20% in some areas) and has been in an economical crisis since the wall came down. The unemployment is the reason for the collapsing German welfare state.

Creating jobs and building an industry should be the #1 East German priority. The government did the right thing.

Re:AMD 300mm?

[Afrob]

And because of their size these are called 'Pizza Wafers'.

The die size of an Athlon XP is about 129mm^2, so at 3/4 surface usage about 410 Athlons would fit on a single wafer. Must be really cheap to produce those things...

think back!

[Anonymous Coward]

"...AMD received $683 million in grants from Germany and the state of Saxony for its next-generation microprocessor wafer facility."

it's not like AMD is gonna change the money into
euro coins and stack them to make a nice looking
factory made from coins, no sir.

the question really is:
who owned the land before AMD bought it (tax?).
who is building the factory(tax?).
who is supplying power(tax?).
who is building the generators that produce
the needed electricity(tax?).
who gets to have a peek at the technology (know-how) once complet(no tax!) :)
who gets know-how for building a chip
producing factory? (def. more to come!)
etc.

this is a micro investment and the reward is def.
going to pay off as long as people have to use
computers (e.g. no telepathy available).

Re:In Socialist Germany

[selderrr]

it has been tried. it's called communism. it failed. miserably.

Re:In Socialist Germany

[BenjyD]

Because this way creates 1000 skilled jobs directly in the area, which increases tax income and reduces unemployment payments. The local economy is helped by the money from the jobs, other companies (builders, suppliers etc) in the area benefit. All round the area's economy improves. This is about long-term growth, not the short term benefits.

It is the job of the government, after all, to improve the lot of its people.

Fab 36

[VanillaCoke420]

So will 36 trendy gay men decorate the factory and have the workers wear something stylish?

Mod down

[imsabbel]

The parent just pulled "facts" out of his ass.
Opteron X -> isnt planed
5Ghz Fsb -> Opteron has no fsb
500mm -> even intel says that the next 5 years they wont TRY creating bigger than 300mm wafers,
65nm -> 2008 65nm will be old stuff...

Advancements are a wonderful thing

[locutus2k]

It is nice to see AMD expanding its company. I have been using AMD chips for several years now, and couldn't be happier. When a company spends the time and money to make developments in arcitecture, they should get something nice in return. Unfortunatly I don't feel intel has been making the advances. The Intel name has been carrying them for a while now, and its time AMD got their recognition.

I've been using the Athlon64 chips and couldn't be happier. Hopefully the new plant will help them nibble away another part of Intel's market share.

wafer size

[Elracim]

This page explains the difference between wafer sizes pretty well.

www.tomshardware.com/cpu/20040201/prescott-05.html

Re:In Socialist Germany

[JanneM]

You may "STRONGLY disagree" - but it is the will of the local population that sets the goals for any government.

If, the voters does set the goal of it's govenment to be improvement of the lot of the people, then so be it. Who are you to disagree - unless you live there and have a right to vote, in which case you can make your views heard just fine.

It's rarely remarkable

[Duhavid]

when a US company builds a US factory.

In the same way it would not be remarkable when a German company built a German factory, nor when an Indian company built an Indian factory.

It is a bit more remarkable when the US business drones without brains build another facility outside the US, then complain that US consumers arent buying it's products. Everyone is worried about the "jobless recovery", but they fail to point the fingers at themselves for shipping the jobs ( and salaries ) overseas. Mind you, I am not nessesarily of the "protectionist" mindset, but it does seem that some moderation is called for.

Did nobody else do a double take?

[surprise_audit]

article explaining how AMD received $683 million in grants from Germany and the state of Saxony

I swear, the first time read that I thought it said AMD was being given the state of Saxony along with a pile of cash... Shouldn't be reading this stuff after working through the night, I guess... :)

Re:In Socialist Germany

[EinarH]

The concept of the classic welfare state (Germany, Denmark, Sweden and Norway) with socialism and a market controlled economy is not about taking away all off your return for hard work. It's more like the government takes a slice of it. So you won't get filthy rich if you work hard, you just get rich.

And about the philosophy; even if you don't filthy rich most people have other motivations besides money for working hard. As long as people feel they get an appropriate share of the material growth they are happy.
So I don't think much of the ambition is removed from the individual as there is no signs that the progress of society halts in these countries.

Good for the city

[giminy]

I lived in Dresden last year, and things haven't been too wonderful there since reunification. Lots of people have been leaving the city to head west, where there are better jobs. The city of Dresden actually pays people 300,- just to move there from other parts of the country (I think some other cities in the eastern part of the country do this as well). That money will easily cover the first month of rent in most areas of the city -- everybody I met would pay about 150,- per month.

That said, this will certainly help bring a little more 'balance' to the country (the Dresden VW plant also helps). 1000 high-paying jobs means potentially 1000 families...lots of little kids that need schoolteachers, food, clothes. I'm sure that the AMD plant will bring in way more money than this in taxes after a few years anyway...