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AMD to go fabless?

Posted on Saturday, April 05 2008 @ 03:42:39 CEST by

Charlie Demerjian from The Inquirer claims AMD will likely split into a fabless semi outfit and a foundry in which the firm has at least a 51 percent stake.
According to our research, the impetus for this move comes from two sides: the desperate need for money and the oodles of capacity they firm has. Fab 36 is running at a decent enough clip, but 38 next to it sitting almost idle. AMD could equip it, fire up the lines and make chips, but for what buyers? With Luther Park options coming up soon, they will have even more capacity than before, and a huge capital outlay to make the fab. They don't need the capacity and don't have the capital.

AMD could simply abandon the Luther Park plans, but there is a billion dollar subsidy attached to it, and that is a lot of money. Even if they only make the fab and sell it, the potential to pocket the cash remains.

So, what do you do? Spin off the fabs to a separate company and sell that to pay off your debt. Silly as it sounds, they did much the same with flash and Spansion. AMD has two state-of-the-art-ish fabs in Dresden and a billion dollar off coupon for upstate NY. Together, they are worth a lot of money, and selling them would pay off the debt AMD has amassed.

That is exactly what they are going to do. The real question is to whom, and that is easy - Abu Dhabi. The emirate already owns almost 10 per cent of AMD, and is awash with money. AMD may not be an AAA investment, but unlike most companies, it has something to offer any country that buys it, technology.

There are few players in the world that can make 45nm parts, and fewer still that are for sale. A buy like this could be the catalyst for the founding of a national technology program, or simply a few billion dollars for bragging rights. Either way, think ulterior motives that are not immediately monetary.



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