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AMD Considering Getting Out of Fabrication Business
mytrip writes "2007 has not been kind to AMD, but it's surprising to hear rumours that they might be considering outsourcing chip fabrication. Analysts are predicting that AMD will try to cut costs by moving some fabrication elements out of the company by early next year. 'One Citigroup analyst is predicting a "transformational move" that would result in AMD's lower-end CPUs being manufactured by a third party and possibly selling off part or all of its Dresden, Germany facility. Another report from Goldman Sachs outlines the investment firm's belief that the company will leave manufacturing completely in the hands of third parties.'"
"AMD Considering Getting Out of Fabrication Busines"
/. helper routine and emailed the on-duty editor, and this still went live with a blatant typo.
You know, I even did the good little
I'm not trying to sound like a jerk, but come on editors, this is basic stuff here.
Being fabless works for lots of companies, for example NVIDIA (disclaimer: I work for the gentle green giant).
There are lots of companies who only do fabrication, just as there are many other fabless semiconductor companies. With process shrinks occuring as quickly as they are today, it makes a lot of sense to let someone else (or several other someone elses) deal with the cost of developing fab facilities capable of the latest and greatest process size.
I currently have no clever signature witicism to add here.
In reality, there are already plenty of third-party fabs out there. For instance, TSMC. And they have a 65nm process and that's what ATI's new 2000 HD series is manufactured on. So AMD (which includes ATI) is already manufacturing a lot of chips through a third-party. Even more than that, the current lowest end AMD processors, the Geode family, which is being used for the OLPC is also already manufactured by a third-party.
The only contention in this story is that AMD will be moving more low-end manufacturing to third-parties. The highest-end CPU's really have to be manufactured by the company itself. Not only does AMD have to stay as close to the bleeding edge as possible but they also have to have control enough to add certain devices or change certain design constraints. The change in volume to a TSMC or other third-party manufacturer from moving over some of AMD's manufacuting would not affect their bottom line or cost very much at all.
In addition, there are plenty of companies making various chips for all kinds of purposes. The limiting factor for new entries into the general purpose processor business is not the fab technology . A company can find the few million to make the masks and start making runs but the number of engineers they would need to compete with a design from Intel or AMD is enormous and would take years. In addition, Via could make a chip at 65nm right now if they wanted to but they don't have the partners or the platforms or market for those chips so they're not going to do it.
So while I'm looking forward to the day when there can be lots of players in the high-performance CPU business, the day is not here yet and this rumor, even if it were true, would do almost nothing to bring it closer.
I thought I read somewhere that TSMC was gearing up to do 32nm fabrication on contract for other companies. Here's a reference to assure me I have some sliver of sanity left. 45nm by September, and 32nm by Q4 of '09. So it seems that at least one company might be an option for outsourcing some fabrication.
Chartered Semi just signed another tech partnership with IBM, Samsung, Infineon, and Freescale. This one goes down to 32nm.
UMC and TI are working on 32nm together, too.
Fujitsu, although not especially known for fabbing chips for third parties, is working on getting down to 32nm as well. They do some fabbing for others now.
In any case, this story at Fabtech gives a much more reasoned and insightful look at the issues. They says it's likely AMD will outsource lower-end CPUs and continue to outsourc emuch of the GPU business as ATI already did. They may ramp up more outsourced work to Chartered than they currently do, and may share some fab space at Dresden and in New York. That's a far cry from going fully fabless.
When the Core series were released, things didn't look to good for AMD. When they announced the delay of Barcelona, things started to look really bad. There are a few reasons why AMD may go bankrupt in a few years:
-AMD is behind in the laptop market, which is growing at a staggering pace. -Intel has as extreme cash flow, and therefore more room for mistakes. -The marketing team at Intel has been doing a better job than its counter-part. -Intel is ahead of schedule. In the meantime, AMD is behind. -AMD recently purchased ATI. It is not necessarily a bad move, but it cost them tons of money. To make things worse, ATI is behind schedule and also behind its only competitor, nVidia, which means less money for AMD. -AMD shares are currently falling.
I can only hope that I am wrong but I would definitely not buy AMD shares today.
Full Tilt
It is well known that running a state-of-art foundry efficiently requires ginormous production volumes, so most semiconductor companies go fabless these days. However, if a company like AMD can't afford its own fab, then Intel might have a huge advantage here and we might see less competition in the microprocessor market from now. Just look at Sun's experience. Sun Microsystems had been historically fabless. Their newest SPARC processors were being fabricated primarily by Texas Instruments, and Texas Instruments has pretty much ruined Sun's ability to compete with Intel on CPU speed because it often took TI years to start producing a new Sun chip in significant numbers. I remember how Sun's introduction of UltraSPARC III was the longest and most painful CPU rollout ever. It took them something like three or four years to replace the major UltraSPARC II products.
"Well, I'd say NASA should outsource launch services, or at least start to look at doing it"
e
Ummm...
http://en.wikipedia.org/wiki/United_Space_Allianc
Don't get too worked up. AMD will be outsourcing bits of production, that's public knowledge. They've contracted with Charter for CPUs, and ATI, which AMD bought in 2006, has always been fabless. So, yes, more outsourcing is in the cards.
Will AMD go completely fabless? I highly doubt it. IMHO, top-end chips pretty much require in-house fabs. That extra 10% of control and 10% of benefit to tweaking a fab to your own specific needs and 10% benefit to setting your own time lines can make the difference between being competitive in the high-end and not. (Yeah, I'm making those numbers up, but you get the idea).
Sure, AMD is having a tough year, but hopefully things will get on track. When they do, having at least one in-house fab is pretty much crucial to being competitive in the top-end... and the top-end counts because the margins are incredible there.
The mid-range chips and lower end stuff can probably be pushed off to a 3rd party... and I think we might see something like that from AMD.
Goldman Sachs is big capital. Big (capital [B]) Capital. They have people in house to analyze everything, and they are doing very well (Very Well) in the market right now. Almost disgustingly well. Of all industries, Big Capital is probably most informed about the widest variety of things, because their only job is to "know." There is literally not much else that they do.
So while it's okay to doubt, I wouldn't bet too much against the top investment banks right now, because they fund much of the world's industries. (And no, this doesn't mean I'm a cheerleader for them, I rather dislike Big Capital, but their performance over the last few years say that they "know" more often than we do.)
STOP . AMERICA . NOW
No, it would not be a good idea, it would be a terrible idea, and it would basically mean AMD intended to get out of the CPU business if not completely liquidate.
Outside of the last couple quarters, AMD's biggest problem has been production capacity. As in, they can't make enough chips, their market share is artificially capped, and as big players like Dell sell more AMD chips others are having a hard time buying enough.
That is NOT a problem you solve by becoming fabless. The already have foundry deals with e.g. Chartered, simply to provide some flexible extra capacity. It CAN NOT replace their current capacity with foundry deals, much less expand it. Being Yet Another TSMC Customer is not how you maintain your position as a top cpu maker.
The way you solve a capacity problem is by building another fab, which is what AMD just did. They built a whole new fab abutting the existing fab in Dresden, to the tune of $billions. $Billions that comes largely in the form of debt. You can't undo that by selling the fab because like a car the equipment begins to depreciate immediately. The only way to recoup that investment is to build parts in that fab and sell them. Now some analyst is saying that AMD is going to dump the fab, abandon that investment as a wash, and essentially give up the ability to have more than a pitance of marketshare while still carrying all the debt for building the fab? That's a great way to shore up the financials!
Utterly. Retarded. Analyst.
But I repeat myself.
The enemies of Democracy are
The market hasn't lost any major vendors yet...
A lot of people seem to be getting really bent out of shape considering that all that has really happened is that a few analysts have speculated that AMD might continue doing something that it has already been doing for a while- i.e. outsourcing more of its low end chips to third party fabs.
If I don't put anything here, will anyone recognize me anymore?
Except, AMD is a single entity, not a collective noun.
Fascism trolls keeping me up every night. When I starts a preachin', he HITS ME WITH HIS REICH!
http://www.amd.com/us-en/Corporate/VirtualPressRoo m/0,,51_104_543_5730~32703,00.html
AMD made sure that (of all things) NetBSD ran on the K8 architecture 18 months before engineering samples were available.
What do you want from them? They just bought ATI and frankly their software development team was a mess, AMD is just beginning to untangle that.
THIS THING CAN TURN ON A DIME, MACROSSZERO STYLE ALSO FUCK BETA, ~NYORON