Advanced Micro Devices Inc. will keep capital spending levels flat as it moves into next year, allocating $800 million to ramp the transition to 0.13-micron processing in Dresden, Germany, and to start .09-micron processing in the middle of 2003, the company told financial analysts during a conference call today.
The Dresden fab will run at full capacity of 5,000 wafer starts a week in 2002, which, due to die shrinks at the 0.13-micron linewidths, will enable the company to produce 50 million processors a year starting in 2003, AMD president and chief operating officer Hector Ruiz said during the call.
AMD will also supplement production by using foundries to make unspecified processor types, Ruiz said. "It is time for us to exploit foundries," he said, without offering details.
Chairman Jerry Sanders said AMD's plans are to outsource as much as 25% of its chip production at an unspecified time in the future.
Sanders told analysts that AMD expects to return to profitability in the second quarter of 2002 and remain profitable for the rest of the year.
He said AMD is on track to significantly reduce its costs to lower its break-even point. "The level of revenues we expect in Q2 '02 will make us profitable, while that same amount of revenue this quarter would not make us profitable," he added.
The company's first 300mm-wafer fab is slated to enter production in 2005 using 0.65-micron processing. A joint venture partner in the 300mm fab has yet to be selected.
Ruiz indicated that the fab would run processors but would also make flash memory chips as part of a joint venture with Fujitsu Ltd.
AMD said it will be able to produce processors in the Dresden fab (Fab 30) at a lower cost than Intel Corp., because AMD's MPU die size is nearly half that of Intel's chips. Ruiz said a 40mm die size running on a 0.13-micron process would yield 625 processors per wafer.
The claimed size and cost advantage would extend to AMD's next-generation 64-bit processors, with Ruiz stating that the upcoming ClawHammer family would measure 64sq. mm when using a 0.9-micron process technology.
Sanders claimed that AMD had increased its processor market share in units shipped in the third quarter to 22% from 17% for the same period a year ago. He added "for the first in AMD history it also was able to break into the double-digit market share for processors in terms of revenue."
He said this reflected higher ASPs, as AMD this year expects processor revenues to be slightly up to flat, while the Semiconductor Industry Association reported industry processor revenues will be down 28% from a year ago.
Walid Maghribi, president of AMD Memory Group, said the firm expects to retain its 14.5% market share in flash memory in 2001, flat with a year ago. Because of severe price erosion in lower density flash devices, he said AMD may be forced "to be more accommodating in reducing prices" to avoid losing more market share in this segment. "However, it isn't our intention to start shipping dollar bills with each product, although we will be more aggressive in pricing."
The AMD executive said flash ASPs had dropped 50% in the last quarter from the year ago period. He said AMD flash shipments by units are increasing, but revenue is offset by the falling prices.