DRESDEN, Germany AMD's manufacturing arm which is heading for a spin-off to form a foundry services provider, regards the current downturn as a good anti-cyclical investment opportunity. Nevertheless, the company is aware of the challenges they are approaching, said two top managers of the company.
While in the foundry business currently even top dogs such as TSMC admit that the market situation is very difficult and a shakeout cannot be ruled out, the manufacturing subsidiary of microprocessor vendor Advanced Micro Devices (AMD) is deliberately heading for that very market. As reported, Abu Dhabi investment company ATIC plans to take over the majority of the manufacturing company with two production lines in Dresden. On top of the utilization generated by microprocessor orders from AMD, the company will join the foundry fray.
Managers of AMD's still-subsidiary demonstrate optimism. Gerd Teepe, Director of AMDs Dresden Design Center feels confident that the crisis won't last forever and that the electronics industry will emerge from the downturn stronger than ever. "We don't expect long-term market predictions to be reduced significantly," he said in an interview with EE Times Europe. "The prospects for microelectronics remain excellent. After all, microelectronics is a crucial technology for many other industries such as healthcare, automotive, and industry automation. This innovation machine is simply indispensible."
With respect to the investor, everybody at the Dresden production site is confident that he does not plan a short foray but a serious and responsible long-term commitment. For instance David Greenlaw, Director Process Integration. "This is not about a few quarter, but about many years," he said.
Teepe's and Greenlaw's positions are in the focus of what will have to be changed at the 3000-employee subsidiary: Teepe's design center will have to support future customers and Greenlaw will have to integrate their orders into the company's established processes. The challenge they are facing is to adapt the internal processes from current captive microprocessor production to the product mix typical for foundry service providers. In addition, sales and marketing have to be modified to the changed environment.
In the competition to its entrenched rivals in the Far East, the Foundry Company will compete by offering the latest technologies and the smallest geometries, Teepe explained the company's strategy. "Competing in the 65-nm market is competing through price. This is something we don't want to get into," he explained. Instead, the company will differentiate itself by offering leading-edge technologies and follow an aggressive roadmap. Currently, the fab is producing in 45-nm geometries. According to Greenlaw, the company plans to ramp up 32-nm bulk production in the first half of 2010. 32-nm SOI production ramp-up is scheduled for the same time frame with volume production in 2011, explained Greenlaw.
A central part in the Foundry Company's strategy will be volume. "High volumes are very important. It is the only way to get high yields", Teepe said. "Our winning formula is capacity expansion. And we have the funds to expand," he said. In terms of product segments, the foundry is aiming at complex devices with high performance and low power dissipation, such as chips for smartphones, graphic applications and PC-related circuitry. However, x86-related IP probably won't be part of the Foundry Co.'s offerings.
The high salaries in Western countries will lose their significance as a factor for location decisions. As technology progresses to smaller geometries, the capital investments required will be much more of a factor, Teepe said. In such an environment, manufacturing excellence becomes the decisive factor. "If you manage to get your yield up faster than your competitor, you gain much more than a well-trained and motivated crew costs," he said, claiming that the staff in Dresden is extremely well trained and stable.
While the Foundry Company will maintain and expand its production capacity in Dresden and later plans to build a new fab in upstate New York, the headquarters will be placed in the Silicon Valley. The reason is that it seeks a location in close proximity to its future customers. Besides AMD which "will remain our customer number one", the newly-installed sales department will target more or less all major fabless companies, predominantly in the U.S., Greenlaw explained.