AMD comes out the closet, says no longer a real man

"Real men have Fabs" - Jerry Saunders, former AMD CEO.

After all the dodging and lying about not having any plans going fabless, AMD finally admits that it is in fact going to sell its fabs. They intend to remain a minority share holder and team up with a company who haven’t got a single clue about semiconductors. But none of that matters because they have lots of money to spend. And in a time when the usual lenders are looking for a some kind of a bailout themselves, it’s either this arrangement or Chapter 11 for AMD.

"On Oct. 7, 2008, AMD and the Advanced Technology Investment Company announced the intention to create a new global enterprise, The Foundry Company, to address the growing global demand for independent, leading-edge semiconductor manufacturing. There is a strong shift to foundries occurring – particularly to foundries with the capacity to produce devices using leading-edge process technologies. With The Foundry Company, AMD will be able to unlock the value of its world-class manufacturing capability – by making it available to a growing community of fabless semiconductor companies. " - AMD's New Global Foundry page.

There's a lot already said about AMD's move. The best one that highlights the concerns more clearly is from Fabtech:

Another aspect that concerned me was the notion pumped out by AMD that demand for leading-edge foundry capacity was something that was in strong demand. Ask SMIC, Chartered or UMC how much of its capacity is allocated to 65nm-and-below production and you will find it is very small... Also, if demand for foundry capacity was that strong, then why are wafer ASPs in decline and the major foundries cutting CapEx each year?... Even worse is the fact that SMIC has struggled since birth to actually turn a profit, so why should we think that a new foundry start-up in Europe (and the U.S.) will fare any better?

The "growing trend" to go fabless is a decision forced upon companies due to the rising cost of running a Fab. This alarming trend have been identified by Intel in the late 90's. AMD knew this day was coming and set a goal of 30% market share just to avoid ending up where it is now. It's entertaining to see how AMD is making it all appear as if it was an advantageous choice.

How can it be advantageous when AMD will now have to ask another company to spend $Billions every time it wants new equipment for a new process technology. How can it not be disadvantageous when your main competitor do not have such bureaucratic problems. Short term, this move by AMD will buy them time for the next year or two. Long term, I can only see AMD becoming the next Transmeta. When The Foundry Company starts losing large sums of money they will become cost conscious and that's when problems begin. Against Intel's "tick-tock" execution, AMD will only struggle to keep up.