How AMD may be able to save its business

BusinessWeek takes a look at what AMD's plan is to survive. The company has more than $5 billion in debt and racked up a loss of $1.6 billion on sales of $2.8 billion so far this year. AMD hopes it will be able to turn the tide with its new "asset smart" strategy which is aimed at saving money while at the same time preserving its manufacturing capacity:

The company has managed to keep a tight lid on its plans, unusual for the gossipy chip industry. The company declined to comment on its plans to BusinessWeek, beyond issuing a brief statement: "AMD continues to look at multiple options that leverage our world-class manufacturing capabilities and relationships to achieve an optimum blend of internal and external operations."

The phrase "optimal blend" is important, because it suggests that AMD is going to outsource at least some of its existing manufacturing operations. The backbone of its manufacturing operations are two fabs in Dresden, Germany, and all the chipmaking equipment in them. It also has two large test and assembly plants in Malaysia and Singapore, and a smaller one in China. One popular theory has AMD turning to a third-party chip foundry company like Chartered Semiconductor Manufacturing (CHRT) of Singapore to step in and operate the fabs under contract. Chartered already makes some of AMD's chips under contract to help AMD keep up with demand surges. Taiwan Semiconductor Manufacturing (TSM) handles manufacturing for AMD's graphics chip unit ATI.

Read more over here.