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AMD talks Ab Fab with UMC

Foundry deal

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Real men own fabs, AMD boss Jerry Sanders famously once said. Real men are also prepared to share them, for AMD has signed a JV with UMC, the Taiwanese contract semiconductor maker, to build a new chipmaking factory in Singapore.

The AMD/UMC fab (or fabrication plant) will knock out 300-mm wafers for high volume production of PC processors 'and other logic products'. UMC will also make PC processors for AMD in a separate foundry agreement.

This will augment production at AMD's Fab 30 in Dresden, where Athlon chips are made. And it will enable AMD to move more quickly to the manufacture chips with a smaller die size. UMC-made AMD CPUs will kick off on the 130 nanometer (more commonly calibrated as 0.13micron) production line. The duo aim to move to 65 nanometer production in 2005.

It requires billions of dollars to build a fab to make today's CPUs, but the payback is cheaper to produce chips. According to AMD, 300-mm wafer fabs can achieve "substantially more than 30 per cent cost savings" compared with 200-mm foundrys.

The trouble is, except if you're Intel, finding the billions of dollars in the first place. So in today's straitened times, this is a very good deal all round for both UMC and AMD.

UMC gets a big, committed customer, while AMD gets more capacity and access to cheaper manufacturing techniques. In July 2001, the company said it was on track to introduce 130 nanometer and SOI (silicon on insulator) technologies at Dresden. More to the point, it expected to reach 100 per cent production capacity at the end of 2001.

The UMC tie-in gives AMD the opportunity to increase CPU market share without having to shell out vast new sums. Remember, the company's Dresden plant was a crippling expense for several years. By 2003, AMD expects to have invested $2.3 billion in this factory. ®

Related link

AMD/UMC press release

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