It's official: AMD has chosen Dresden as the location for its first 300mm wafer fab, next door to its 200mm Fab 30 plant.

Fab 36, as the new facility will be known, is due to go into volume production in 2006, employing some 1,000 staff, AMD said.

According to Rivet, Fab 36 will cost $2.4 billion to build and operate over the next four years, with more than half of that total coming from "external financing and government support". The $1.5 billion being offered to AMD includes $700 million in loans from a consortium of banks - part of which is an 80 per cent residual guarantee from federal and local government - plus $500 million in government grants and $320 million in equity funding from the local Saxony administration and other European investors.

AMD hinted that other investors may yet chip in to the total. "The balance of the financing will be provided by AMD and other potential partners," it said.

Dresden is believed to have beaten IBM's East Fishkill facility, which given the close ties between AMD and IBM - particularly on the R&D front - would have seemed the most logical choice.

However, AMD thinks differently. "We believe AMD Fab 36 offers the best solution for meeting future customer demand while advancing long-term shareholder value," said Rivet in a statement. ®