AMD's Foundry Plan Seen to Threaten TSMC

Taipei, Oct. 13, 2008 (CENS)--Taiwanese industry watchers estimate Advanced Micro Devices (AMD) Inc.'s bold plan to spin off its manufacturing operations into foundry operation will likely square off No.1 pure foundry Taiwan Semiconductor Manufacturing Co. (TSMC).

They base their estimates on AMD's advantageous technology for making microprocessors, a category of chips requiring high-end chip-making processes. TSMC is working to shoot for orders from vendors of various microprocessors to boost earnings and has reportedly won orders to begin making processors for the No.2 microprocessor maker in the second quarter of 2009.

AMD Chief Executive Officer Dirk Meyer recently said the planned foundry company would make chips for AMD and tap global foundry market. However, he added that the new venture would not affect his company's partnership with TSMC on production of graphic chips and chipsets.

Industry watchers expect AMD's foundry business to put Nvidia, Broadcomm and Qualcomm on its customer list. These companies are having their products produced at TSMC.

AMD will open the new venture in collaboration with Abu Dhabi government's Advanced Technology Investment Co., which will finance the venture with US$6 billion.

AMD is a member of the IBM Fab Club, which is estimated to become another edge for AMD's foundry operation from the point that the alliance's members will likely become its customers.

However, some watchers point out that many integrated device manufacturers (IDMs) like AMD have branched out into foundry services, but none of them has made money. They note TSMC is the only money-making foundry.

AMD is running two fabs in Germany and plans to construct a brand new factory in New York. The planned foundry will take over AMD's US$1.2 billion in debt. Abu Dhabi's funding will go to new factory plans.