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AMD Gives Up Its Share In GlobalFoundries

Posted by Soulskill on from the letting-the-chips-fall-where-they-may dept.

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."

10 of 107 comments (clear)

  1. Mixed news by O('_')O_Bush · · Score: 4, Insightful

    It was a smart (but expensive) strategic move for chasing the cutting edge, but if their business plan is to leave the cutting edge behind, then I fear we lost one of the biggest drivers of progress. Intel might have the technology, but AMD gives them the incentive to keep running with it.

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    1. Re:Mixed news by Daniel+Phillips · · Score: 4, Interesting

      AMD isn't giving up design, just the foundary. And in future, Intel must compete with TSMC and friends in process technology, as opposed to their time tested strategy of cutting off AMD's air supply. Makes it more of a game now don't you think?

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      Have you got your LWN subscription yet?
    2. Re:Mixed news by erice · · Score: 3, Interesting

      When you control the design and the manufacture, you have intimate knowledge of both. You can better design for the manufacturing process, and alter the manufacturing process to suit the design. This just isn't possible to the same extent when you work through a foundry

      True, but AMD has not opperated this way since they initially spun off Global Foundaries. Bobcat and Bulldozer were specifically designed to be portable between foundaries and not dependent on special process tweeks. AMD's recent experience with Global Foundaries was the worst of both worlds: limited control and poor execution. Since AMD doesn't have the money to re-enter the fab business, the only viable direction available was to cut the cord and become truly fabless. They might not get any better control but at least they should be able to find a foundary that can execute.

  2. SoCs? by Speare · · Score: 3, Informative

    new-CEO Rory Read's plan to de-emphasize cutting-edge silicon in favor of SoCs

    After some eyebrow knitting, my best guess is "Systems on a Chip"? Eschew obfuscation, expand jargon abbreviations.

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  3. seems... weird. by catmistake · · Score: 3, Insightful

    It's like... Ford decides to spin off its auto business so it isn't tied down to one manufacturer, and can then produce Ford's at Chevy and Dodge and even Honda plants. Why does it seem like someone decided the AMD brand was more valuable than its product? Does this help the consumer in any way to separate brand from product?

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    The Admin and the Engineer
  4. Car Analogy Fail by Anonymous Coward · · Score: 3, Informative

    It's like... Ford decides to spin off its auto business so it isn't tied down to one manufacturer, and can then produce Ford's at Chevy and Dodge and even Honda plants.

    Chevy, Dodge and Honda are competitors of Ford, AMD isn't doing this to be able to manufacture chips at a foundry owned by Intel.

    Why does it seem like someone decided the AMD brand was more valuable than its product?

    Because you don't understand what's happening. This move enables AMD to build chips at any foundry, in fact it means they can use the best foundry rather than being tied to an underperforming one thus resulting in a better product.

    1. Re:Car Analogy Fail by Volvogga · · 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.

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  5. Re:AMD is dead by serviscope_minor · · Score: 4, Interesting

    Pack it up. AMD is dead.

    Tell that do my 4x12 6100s.

    Intel is faster per thread on the top end. But, bu the time you have 32/48/64 you're obviously running a parallelizable workload. AMD gives way more bang for the buck.

    Speakingof which, they just bought SeaMicro. Apparently they can "cram" 512 atoms or 1024 cores into 10u drawing about 5.5kW.

    Well, 5.5Kw will get you 6 1U 4x64 6200 servers, which has 1536 rather faster cores and fits in only 6U, with the same power draw.

    I'll bet the SeaMicro box is much, much more expensive too.

    Not sure how the SeaMicro numbers add up, TBH.

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    SJW n. One who posts facts.
  6. Hang in there, AMD. by Beelzebud · · Score: 4, Insightful

    I hope they know what they're doing because I for one do not look forward to a PC marketplace dominated by only Intel and Nvidia.

  7. Re:AMD is dead by unixisc · · Score: 4, Interesting

    Not anymore. Once you have no dedicated manufacturing capacity of your own, then during times of general market chip shortage, the fabs will go for the higher margin chips, which AMD can't be since they're selling them @ near break-even prices. The only advantage for AMD here is that that during times of inventory glut, they are under no pressure to keep ordering to keep the lines running, but downside even to that is that fabs would give them a lower priority when the market returns.