AMD moves closer to fabless design

The chip Co. has long had troubles manufacturing, and has invested heavily in new capacity both in America and Germany. But its inability to get chips made - witness the delay in Barcelona and R600 - is leading many to question just how effective its manufacturing is.

Which may contribute to the report from Gleny Yeung, Citigroup analyst, who tells readers that AMD has confirmed that it is looking to scale back its in-house manufacturing. This will result, Yeung reckons, in a selling off of manufacturing capacity in Dresden and New York and more outsourcing to TSMC and Chartered.

Without confirming the story, AMD told journalists that "We're looking to find ways to extend [the outsourced] model beyond research and development to the full range of the manufacturing supply chain... That could [extend] from increasing the amount of processors we send out for chartered manufacturing and could also include things like establishing partnerships on the manufacturing side."

AMD's competitor, Intel, is a manufacturing powerhouse which has invested billions over the past decade to keep its fabs ticking over with the latest technology - and as such, has not suffered from problems of execution, merely of design.

For AMD to change its business model in this way would be a substantial turnaround from the investment it put into building manufacturing capacity at the turn of the millenium. But Wall Street is panicking about the firm's results, and with no easy changes on the horizon and Intel chipping away at the market share AMD had gained, this could be one way back to competitiveness for DAAMIT. µ