While Advanced Micro Devices is busy spinning off its fabs into a new joint venture, the chip maker’s executives said AMD still plans to deliver its 45-nanometer “Shanghai” processors by year’s end.
In an interview, Nigel Dessau, executive vice president and AMD’s chief marketing officer, said despite plans to spin off AMD’s manufacturing facilities in Dresden, Germany, into a new joint venture company, the chip maker still plans to bring its 45-nm Opteron processor, code-named Shanghai, to the market by the end of 2008.
While the fab spinoff should help AMD correct its financial situation, which includes seven straight quarterly losses, Shanghai is seen as the company’s answer to Intel’s recently released six-core Xeon processors for high-end systems and its upcoming lineup of chips based on the new “Nehalem” microarchitecture.
During previous disclosures, AMD officials have said Shanghai will contain four processing cores and offer 6MB of Level 3 cache compared with the 2MB of L3 cache in the 65-nm version of the quad-core Opteron processors. While AMD spokespeople have not discussed specific clock speed improvements with the 45-nm lineup, Shanghai is expected to deliver a boost of at least 20 percent, which should get the clock speed closer to the 3.0GHz promised with the original quad-core Opteron processors.
When Shanghai goes into full production in a few weeks, it will be manufactured at AMD’s Fab 36 facility in Germany. That facility, along with Fab 38, will form the base for The Foundry Company, the new joint venture between AMD and ATIC (Advanced Technology Investment Company), which is backed by the government of Abu Dhabi.
In the interview, Dessau said the company plans to fully ramp its production to 45-nm as planned and the Dresden facility will deliver products to AMD’s partners and customers on time.
“I don’t expect to see any change in plans as we drive toward 45-nanometer,” Dessau told eWEEK. “The important message to take away from today’s announcement is that we just didn’t pick any partner to work [with] but the right partner to work with for this plan.”
Tom Sonderman, vice president of Factory Automation Engineering for AMD, said there are also plans in place to make sure that AMD will work with its counterparts at The Foundry Company as it moves toward delivering new processors, whether those will be the upcoming 45-nm desktop chips or new microarchitecture or a further die shrink to reduce the processors to 32 nm.
“We have been preparing for this for a long time and we have been thinking about this for a year,” Dessau said. “We have planned this process around our processors and this will allow us to deliver our products with a minimum amount of disruption.”
Advantages, Threats to the Deal
While AMD will serve as The Foundry Company’s first and primary customer for x86 processors, the new company has ambitions beyond serving a single customer.
In the future, Sonderman said he sees The Foundry Company as competing against some of the other large chip manufacturers in the worldwide market, including TSMC (Taiwan Semiconductor Manufacturing). Right now, TSMC manufactures all of AMD’s ATI graphics chips, and Sonderman said The Foundry Company plans to compete against TSCM to capture that business in the future.
By spinning off its manufacturing facilities, AMD can now concentrate on processor design and marketing, while The Foundry Company can compete for new business on its own. It’s an agreement that Roger Kay, an analyst with Endpoint Technologies Associates, said he believes is the smart play for competing against Intel and bringing the company back to financial security.
“AMD gets to lower its fixed costs, making it profitable at a lower level of revenue, and it can still participate in leading-edge technology development,” Kay wrote in an Oct. 7 research note. “It gets out from under some of its debt and receives a cash infusion from a patient source. The bonus: It gets to participate in an entirely new business, a foundry that takes in knitting from other fabless semi companies. AMD sweated this deal for a long time.”
Before any deal goes through, however, AMD and its Abu Dhabi partners are expected to face some scrutiny from CFIUS (Committee on Foreign Investment in the United States), a government interagency committee chaired by the Secretary of the Treasury. AMD’s processors are used in many computers and servers used by the U.S. government, including the giant Roadrunner supercomputer that IBM built for the Los Alamos National Laboratory in New Mexico.
In the interview, Dessau said AMD and its Abu Dhabi partners are already preparing the paperwork for the CFIUS committee, although he expects the government will approve the joint venture partnership without problems. In addition, AMD is preparing paperwork on the deal for the European Commission, the regulatory arm of the European Union.