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Wednesday, June 20, 2007
AMD May Exit CPU Fabrication Business

The weak profits reported by AMD in the past two quarters leaves the company with no other solution but to consider of getting out of the CPU fabrication business.

However officially nothing has been declared.

As far as CPU manufacturing, AMD now operates two fabs: Fab 30 and Fab 36. AMD has heavily invested in its Fab 30 plant in an effort to proceed in the development of 300nm production technique.

However, there is a feeling among analysts that the company's negative financial will force AMD out of the manufacturing business either completely or partially, through outsourcing, in an effort to cut down expenses.

AMD is currently cooperating with IBM and Chartered in the fabrication of CPUs. According to a statement that AMD has made to, Chartered is already in the process of manufacturing CPUs 65nm for AMD. In addition, AMD already uses IBM's plants for manufacturing and R&D.

AMD said that the company is looking to extend a model that it already has in place to other parts of the manufacturing and supply chain. "For instance, on the process technology side, we have a joint development agreement with IBM," said Drew Prairie of AMD in a discussion with Arstechnica.

Semiconductor manufacturers such as Texas Instruments and Sony have also changed their business model in the past by outsourcing Silicon fabrication to other companies. However, such a decision could not have the same results for AMD. AMD's rival Intel is accelerating its fabrication process taking advantage of its numerous manufacturing plants worldwide. Intel's high production volume allows the company to offer CPUs at lower prices, leaving limited options for AMD to follow up.

Without any doubt, AMD's decision is expected by the industry with great anticipation.

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