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Rumour: AMD Splitting Up

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Rumour: AMD Splitting Up

The rumours have been circulating for a while that AMD would be undergoing a schism of some sort. Despite AMD's refusal to comment on such speculation thus far, a formal announcement is expected to be made "this morning" - which means about 4pm for those of us in the UK. Both Reuters and the Wall Street Journal, however, claim to have already received confirmation form unnamed sources, though, so here's the story so far.

AMD currently takes care of a great deal of its own manufacturing in-house, using fabs such as Fab 36 (pictured above) in Dresden, among others. Post-split these manufacturing operations will become their own company, taking with them $1.2 billion of debt currently attached to AMD's manufacturing operations. This will allow the remaining design-focussed company to focus its efforts on designing profitable chips.

In order to fund the move, Reuters says two Abu Dhabi state -owned venture capital companies will be putting up some $6 billion. One company buying up £300 million of AMD stocks and warrants while the other will pour $5.7 billion into the newly-acquired (in a manner of speaking) manufacturing plants. Word has it that ex- AMD CEO Hector Ruiz will become the chairman of this new company, with Doug Grose (currently Senior Vice President of Manufacturing and Supply Chain Management) taking the position of Chief Executive.

As much of a matter of pride having manufacturing its parts in-house may have been to AMD, the success of companies such as nVidia goes to show that relying on outsourced manufacturing from companies such as TSMC isn't necessarily a bad thing. Hopefully for AMD and, let's face it, a competitive marketplace, this move will help keep the company in the fight against Intel.

Link:

Reuters

Stelph

October 7, 2008, 3:12 pm

Sounds like a good move, a lot of the major industries now rely on out-sourcing manufacturing of products to 3rd party manufacturers as it helps to lower set-up costs and you can compare bids from several manufacturers to find the cheapest. Also the 3rd party manufacturers usually work to a higher quality that in-house manufacturing because their asses are more on the line!





Good news

The Pope

October 7, 2008, 3:43 pm

I read that the current net worth of the combined AMD/ATI is *less* than the cash AMD spent on buying ATI in the first place. Not ideal :(

Hallainzil

October 7, 2008, 4:06 pm

@The_Pope: It's been that way for quite a while, as far as I know. Very sad.

Juxtah

October 7, 2008, 8:09 pm

If the move allows AMD to keep competing with Intel at least semi-effectively then it can only be a good thing. Hope it doesn't impact the ATI branch though since they've been doing a really good job as of late.

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