AMD planning to outsource CPU production to TSMC in 2H08

[Idontcare]

http://www.digitimes.com/mobos/a20080513PD207.html

My heart goes out to the AMD fab crew...I have been there (watching your company start to farm out stuff to the foundries) and I listened for five years about how is was never going to impact Texas Instruments desire to have internal development and production. This is a slippery slope and this (drip drip drip goes the rumors) is how it all starts.

Now the article is sensationalism headlining at its finest. They are really talking about Fusion, which was noted a year ago as being a candidate for foundry business.

What I am surprised to read is that Fusion will be SOI (really thought they would have migrated a low-end part like that back to bulk Si and harmonize with foundry process technologies) and that it will be at TSMC (really thought they would have gone with IBM or Chartered to founder an SOI part given the IBM fab club development relationship).

Sigh. Another day.

 

[myocardia]

Unfortunately, that wasn't a Fuad special, so it's most likely mostly true. How sad. I wonder if the morons who own AMD stock are going to let Hector ride their company all the way into the ground? I mean, he's gotten it 90% of the way there, in just a few years.

 

[Phynaz]

No surprise, didn't we all know what asset light was?

Hopefully they are not too far gone and this will help right the ship. I guess it depends upon how much they can get for their current foundries and equipment.

 

[Foxery]

Hmm... how far ahead of official statements does Digitimes tend to be?

AMD's stock already creeped up slightly since they started the "Asset Light Strategy" buzz. I guess I'll see in the morning whether anyone on Wall Street reads Digitimes

 

[Viditor]

I think you guys are missing the point here...
AMD is increasing the market for their used Fab lines. Remember that they are getting ready to discontinue (over the next 18 months) all of their 90nm and 65nm SOI production lines.
While they were recently able to sell off their old 180nm lines to a Russian company, as the number of companies that can use the equipment increases, so does the value of the lines.

What we need to watch for is what happened at Chartered...if AMD gives a license to TSMC for APM 3.0, that would be a major announcement. Only APM qualified Fabs will be considered major suppliers for AMD.

 

[myocardia]

Wait, I just thought of something. AMD has to make something along the lines of 80 or 85% of their own processors, or they violate their x86 license. In other words, this is no big deal, they're actually just changing suppliers, for the small percentage that they don't make themselves.

 

[jjmIII]

Originally posted by: myocardia
I wonder if the Americans are going to let Bush ride their country all the way into the ground? I mean, he's gotten it 90% of the way there, in just a few years.

I agree

 

[geoffry]

I have a question that you guys might know more about than I do.

With NVDA and ATI using TSMC for many years without many hiccups (that I know of), isn't this a good thing for AMD? Sure costs would be a little higher than making the chips yourself (although this might not be the case, depending how efficient / inefficient AMD's setup was compared to the dedicated fabs that TSMC run).

Or is the fabbing much more important to do in house for a CPU co. than a GPU co?

 

[Viditor]

Originally posted by: jjmIII

Originally posted by: myocardia
I wonder if the Americans are going to let Bush ride their country all the way into the ground? I mean, he's gotten it 90% of the way there, in just a few years.

I agree

LOL...a very clever juxtaposition. WD

 

[Lonyo]

http://www.anandtech.com/showdoc.aspx?i=2734&p=1

AMD's partnership with Chartered Semiconductor Manufacturing Ltd. out of Singapore will guarantee additional 90nm production capacity beginning in the second half of this year. By the end of this year, AMD's capacity will have increased tremendously over the single fab they had producing 90nm parts previously.

April 2006.

Asset light is not: moving to a fabless manufacturing model

Asset light is at work today:
? Early stage R&D: IBM partnership
? FlexFab Production: Chartered, TSMC, UMC
? Assembly and Test: Amkor, ASE, STATS, SPIL

Date? July 2007

Source: http://www.amd.com/us-en/asset...nalystDayDougGrose.pdf

THIS ISN'T EVEN NEWS.

 

[Idontcare]

Originally posted by: myocardia
Wait, I just thought of something. AMD has to make something along the lines of 80 or 85% of their own processors, or they violate their x86 license. In other words, this is no big deal, they're actually just changing suppliers, for the small percentage that they don't make themselves.

They can't outsource more than 20% of the production...but there is always a question of what constitutes "production".

Is your Ford vehicle "made in America" when 90% of the components are made in Asia and shipped to an assembly plant in Michigan? Just an example to make a point, these contracts always have their wiggle room for the emboldened management team.

Right now AMD has set the stage perfectly and there is no way in hell Intel would be stupid enough to shoot themselves in the foot with the anti-trust rifle by taking AMD to court and suing them for breach of licensing contract.

The Fusion brand is no mistake, AMD will do what Microsoft did to skirt anti-trust laws when they sold Win2000 with IE5 and told the world it wasn't a bundle that violated Win98+IE anti-trust issues with Netscape but rather that Win2000+IE5 was an integrated cohesive OS.

Fusion will be spun as something that exists as a new product outside the scope of the x86 production limitations and a GPUCPU fabbed at TSMC doesn't count as a "full" unit of production being done outside AMD.

It's beautiful, clearly Intel sees it happening in front of them (this isn't rocket science) but what can they do? Sue themselves into a DOJ anti-trust action? I don't think so, that would violate the best interests of their shareholders.

@Lonyo - the flexfab stuff was for bulk Si chips (GPUs and the older 130nm semprons)...the news here is that a brand new product line is being developed from the bottom-up for fabrication in a foundry...this is a major shift in strategy and the first of many steps any IDM must take to make the transistion to fabless. Surely you recognize the relevance this news has to some of us market watchers.

 

[Lonyo]

Originally posted by: Idontcare

@Lonyo - the flexfab stuff was for bulk Si chips (GPUs and the older 130nm semprons)...the news here is that a brand new product line is being developed from the bottom-up for fabrication in a foundry...this is a major shift in strategy and the first of many steps any IDM must take to make the transistion to fabless. Surely you recognize the relevance this news has to some of us market watchers.

I'll wait for the outcome of discussion over a potential Luther Forest fab which is happening today ($3.2bn investment) before I comment on what AMD might be doing in terms of reducing its own fabrication capabilities.
Building a new fab and announcing the ground up design of a relatively low volume (at least first run) product does not, to me at least, indicate that they are going to make a transition to fabless.
The all-in-one market will (arguably) be limited in size compared to the full fat market (even just laptops). Making the first run product designed ground up for outsourcing doesn't really seem like a bad idea. AMD has limited 45nm capacity, they are looking to make more fabs, and they are going to need to use their existing stuff to produce laptop/desktop/server full fat CPU's.
Look at the recent piece by Anandtech on the K10.
http://www.anandtech.com/weblog/showpost.aspx?i=443

Well, let us see what Intel thinks. First of all, where do most of the 45 nm chips go? Just a few weeks ago, Anand reported that Intel had no intention of flooding the desktop with 45 nm Core 2 chips quickly.
Those 45 nm chips are going to the server market. Why? Several reasons.

With Intel directing 45nm to servers, and AMD possibly looking at new fabs (depending on what happens with Luther Forest), it seems to make sense to assume that AMD, where possible, would want to make its low cost/relatively low volume (IMO) part not require any of their valuable 45nm fab capacity.

Seems like a sensible decision to me really, although I could be missing something.

 

[Pelu]

If the point is to lower expenses and manufacture costs, and in the end those reductions are reflected in the final product.. then for me they can outsourse everything... (even the electric power can be outsourced into India) lol...

Now if they keep selling their products for the same price.. just to earn more money... then i dont really care about the outsourcing...

 

[Idontcare]

Originally posted by: Lonyo
I'll wait for the outcome of discussion over a potential Luther Forest fab which is happening today ($3.2bn investment) before I comment on what AMD might be doing in terms of reducing its own fabrication capabilities.
Building a new fab and announcing the ground up design of a relatively low volume (at least first run) product does not, to me at least, indicate that they are going to make a transition to fabless.

I assume you've heard the cliche "can't see the forest for focusing too much on one tree"...what does this cliche mean to you? Have you ever seen someone doing it and thought this comment to yourself? I've done it, focused on a detail and missed the entire big picture, but I've never successfully self-assessed and realized this, it's always taken someone else to point it out to me before I had my "doh!" experience.

 

[Viditor]

Originally posted by: Idontcare

Originally posted by: myocardia
Wait, I just thought of something. AMD has to make something along the lines of 80 or 85% of their own processors, or they violate their x86 license. In other words, this is no big deal, they're actually just changing suppliers, for the small percentage that they don't make themselves.

They can't outsource more than 20% of the production...but there is always a question of what constitutes "production".

Is your Ford vehicle "made in America" when 90% of the components are made in Asia and shipped to an assembly plant in Michigan? Just an example to make a point, these contracts always have their wiggle room for the emboldened management team.

Right now AMD has set the stage perfectly and there is no way in hell Intel would be stupid enough to shoot themselves in the foot with the anti-trust rifle by taking AMD to court and suing them for breach of licensing contract.

The Fusion brand is no mistake, AMD will do what Microsoft did to skirt anti-trust laws when they sold Win2000 with IE5 and told the world it wasn't a bundle that violated Win98+IE anti-trust issues with Netscape but rather that Win2000+IE5 was an integrated cohesive OS.

Fusion will be spun as something that exists as a new product outside the scope of the x86 production limitations and a GPUCPU fabbed at TSMC doesn't count as a "full" unit of production being done outside AMD.

It's beautiful, clearly Intel sees it happening in front of them (this isn't rocket science) but what can they do? Sue themselves into a DOJ anti-trust action? I don't think so, that would violate the best interests of their shareholders.

@Lonyo - the flexfab stuff was for bulk Si chips (GPUs and the older 130nm semprons)...the news here is that a brand new product line is being developed from the bottom-up for fabrication in a foundry...this is a major shift in strategy and the first of many steps any IDM must take to make the transistion to fabless. Surely you recognize the relevance this news has to some of us market watchers.

To play Devil's Advocate here...filing a suit for breach of contract would be a breath of fresh air for Intel's legal department right now. Currently, Intel has very little leverage in any anti-trust settlement negotiation (and the sure as Hell can't let this actually go to court)...breach of contract would be a Godsend to them.

 

[myocardia]

Originally posted by: jjmIII

Originally posted by: myocardia
I wonder if the Americans are going to let Bush ride their country all the way into the ground? I mean, he's gotten it 90% of the way there, in just a few years.

I agree

Now I agree with both of us.

Originally posted by: Idontcare
Fusion will be spun as something that exists as a new product outside the scope of the x86 production limitations and a GPUCPU fabbed at TSMC doesn't count as a "full" unit of production being done outside AMD.

Bleh, now that I think about it, Fusion won't account for anywhere near 20% of AMD's production, anyway, at least in '08. Maybe next year it will, but by then, AMD will most likely already have the capability to fab their own Fusions.

 

[Lonyo]

http://www.wten.com/Global/Story.asp?s=8329128

Advanced Micro Devices still hasn't entirely committed to building in the Luther Forest tech park

Coming into question, however, is whether or not AMD is committed to the area. The company has yet to officially stake its claim in Malta, but that doesn't necessarily mean the company is looking elsewhere.
"There is no ?plan b'," Tisdale said, "we are focused on this area as far as the next place to develop a manufacturing facility, but there are many factors that are involved in that kind of decision"

Advanced Micro Devices has until July of 2009 to officially commit to the Luther Park site. Until then, the company says it plans to move forward with the permit and legal process to ensure that when the final decision is made, the road will be clear to develop.