AMD: 'At heart, we're a design company'
Look, Ma! No foundry!
'Real men don't need fabs'
That is by no means meant to be an exhaustive list. But there are a lot of different ways chips can get made these days, and it is increasingly true that no chip maker can stand alone. Note with humor that Intel and TSMC have inked an agreement today that will see the Taiwanese chip maker create variants of Intel's Atom x86 processor that will in turn be sold by Intel into its OEM channel.
Basically, TSMC is a partial Foundry Co for the Atom processor. So even big, rich, and proud chip makers like Intel, which was bragging three weeks ago that it was shelling out $7bn to upgrade its U.S.-based fabs has to nonetheless deal with the harsh economic realities of chip making. Everybody is going to need friends, and this is going to be a cooperative effort.
"I know this violates Jerry Sander's rule, that real men have fabs," says Dessau. "But markets change. Real men work in ecosystems, and it is always better to spend someone else's money than your own."
One part of AMD, the ATI graphics chip business it acquired in July 2006 for $5.4bn, never had its own foundry. In fact, it uses TSMC to make most of its chips as well as another Taiwanese foundry, the slightly older UMC. And, soon, Foundry Co. will be getting a little taste of that ATI graphics chip action too, as a sweetener for the ATIC-backed deal. You can see now why Intel was keen on working a deal with TSMC today, of course.
AMD is, of course, bound pretty tightly to Foundry Co. for its current 45 nanometer processes, used to create the current "Shanghai" quad-core Opterons, among other chips, as well as the future 32 nanometer chip making processes coming down the pike. Dessau says that AMD and Foundry Co. are exploring their options for 22 nanometer processes. "At this point, we are not sure we will go anywhere else," says Dessau. "But in five years time, who knows? We have designed our model so we have options."
With the slip in the "Barcelona" quad-core processor launch in late 2007 into early 2008 and the fact that AMD is trailing Intel in chip making processes for several years, there has been plenty of talk about AMD losing some of the mojo it had when the Opteron chips busted onto the scene and scared the living hell out of Intel in April 2003. "We have three chips in a row of not just meeting, but beating our dates. AMD has its mojo back, and we have a great set of products out and on the way," says Dessau.
Focusing on chip design, sales, and marketing is more important than ever, and it is going to require some freedom. "The single most important factor in the semiconductor business today is that the speed of the processor no longer determines the experience of the end user," Dessau explains. "And AMD can't be an agile company if we have huge debts and have to run a manufacturing core."
In a separate but related announcement, AMD has appointed Bruce Claflin, formerly chief executive officer at 3Com and a long-time exec at IBM and Digital Equipment, as AMD's chairman of the board. He replaces Hector Ruiz, who has been AMD's chairman since being hand-picked by Sanders as his successor back in 2000. Ruiz has retired from the AMD board and is now chairman of the board at the Foundry Co.
AMD also said that Waleed Al Mokarrab, chief operating officer at Mubadala Development Company (one of the backers of the Foundry Co from Abu Dhabi that is kicking in funds alongside ATIC, but which has no shares in the company), has been appointed to AMD's board of directors. ®