Rumour: AMD Splitting Up

WSJ and Reuters can't both be wrong, surely?

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.


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