SAN JOSE, Calif. In case you haven't already heard or noticed, Advanced Micro Devices Inc. is going fabless.
As reported, AMD plans to spinoff its manufacturing arm into a new foundry vendor, with financial help from the Abu Dhabi government. This will turn troubled AMD into a pure design house.
Who are the winners and losers in this deal?
AMD: The company can now rid itself of costly fabs and focus on processor design. For AMD, it's difficult to keep up in the capital spending race with rival Intel Corp. Given its current financial plight, AMD cannot afford to build new fabs, nor could it procure the next round of lithography scanners and other gear.
Intel: The chip giant will no doubt create fear, uncertainty and doubt (FUD) about AMD's move. Intel will repeatedly discuss the virtues of being an IDM and owning fabs, saying the fabless model has never worked in the x86-based microprocessor market. It's true. Cyrix, NexGen and others have all failed.
Can AMD pull it off when others have failed? It's a tall order. Processors are complex beasts, and it helps to have design and manufacturing working in tandem. Ever heard of DFM?
The State of New York: In 2006, AMD announced plans to build a 300-mm fab in upstate New York. New York's Saratoga County then poured $100 million in the basic infrastructure for the fab (roads, pipelines, etc.). Recently, the fab project looked dead, based on AMD's woes. Now, it's alive, thanks to Abu Dhabi.
Foundry customers: Just what the doctor ordered: Another foundry choice. The problem: With another competitor looming on the horizon, foundry vendors may have to cut their prices to keep customers aboard. So foundry customers will benefit.