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Meyer says "smart men have foundries"

AMD is struggling with returning to profitability at the same time it is fighting with Intel in the X86 processor market. The struggles have led to some hard decisions at AMD that have included layoffs and pay cuts.

As AMD prepares to shed its foundry operations and spin them into a new company, AMD CEO Dirk Meyer is opening up about the changes. AMD founder Jerry Sander has a maxim he lived by when AMD first started that stated, "Real men have fabs."

Meyer suggests that while Sander's was a smart man, the market has changed significantly since AMD was founded. Meyer suggests a new maxim, "Smart men have foundries." Meyer said during an interview with eWeek, "Jerry was a real smart guy but the industry has changed a lot since that time, so I think, ‘Smart men have foundries,’ is my new quote."

Whatever Meyer's new maxim for success is, the fact remains that spinning the foundry portion of AMD off into a new company was a good way for AMD to get much needed capitol and remove debt from its books at the same time.

EWeek reports that the spin off means AMD received $800 million in capital and was able to remove $1.2 billion in debt from its books. The majority of that debt was from the purchase of ATI, which continually haunts AMD.

Meyer continued saying, "Clearly it’s going to be a culture change for the company. There are a large number of capable manufacturing technologists and manufacturing people who will no longer be part of AMD, but the good news is they get to create a new company. Some people have asked me about the risk—as to imply there are big risks—but honestly I think we are on top of what we have to do both in terms of R&D and supply chain operations."

The spinoff of the foundry portion of the company was announced in October of 2008 and was temporarily called The Foundry Company. The spin off was finally approved by AMD shareholders this month allowing the process to continue.

Former AMD CEO Hector Ruiz will head The Foundry Company and the official name of the company will be announced soon according to eWeek. The split will allow AMD to focus on the design and marketing of CPUs to better compete with Intel.

Intel has moved well ahead of AMD in many markets and AMD has work to do to regain ground it has lost. AMD has been hit with a number of significant losses over the last several years that have impaired the company. The most recent loss came in 2008 with AMD posting a loss for the year of $3 billion.

Meyer also talked a bit about Intel and its claim that license agreements in place between AMD and it would not be covered for the new company. Meyer said, "I think it’s pretty clear that they [Intel] are trying to instill fear, uncertainty, and doubt in the minds of our customers, shareholders and other stakeholders."

AMD still maintains that the licensing agreements are in effect despite the spin off.



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RE: Was the ATI move really bad?
By Penti on 2/28/2009 10:18:15 PM , Rating: 3
I think your forgetting that the old factories wasn't incorporated in the same corporation as AMD Inc as they where there own corporations back then too just that AMD was the parent company and therefore design and fab people worked for the same companies even if that was AMD Germany. Design people will still sit in the same offices next to the fabs though. The real benefit from it is that it brought in capital, capital that AMD itself couldn't bring in. CSM already has foundries with AMDs tech (APM etcetera). AMD itself should also have a easier time bringing in investments and capital for design and product development now.

So it shouldn't really be a problem to have other customers. Not sure who that would be yet though, chipsets and GPUs are still made by TSMC. Foundry company would still work with others foundry companies like before, already mentioned CSM, and there's IBM too. They won't stop working together just because they become a foundry, they still need to license tech between each other, develop technologies and cooperate. They just wouldn't be competitive any of them if they didn't. And they get paid for doing all that work for each other any how.


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