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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: still haunts? um, what are you smoking?
By aj28 on 3/1/2009 3:29:16 AM , Rating: 2
All market data shows ATI gained very little ground in market share in the last 2 quarters (latest Peddie, Steam, etc) at the height of the 4800 series popularity.

Be that as it may, they aren't bleeding the way nVidia is.

Also, keep in mind the fact a certain other graphics company is growing in this market... It is tough for AMD (not to mention nVidia) to push their integrated graphics solutions in a processor market dominated by Intel. Low-priced E2000/E5000 series SKUs are beginning to take over the market once owned by the Athlon X2 line. While AMD has picked up some ground with its affordable quad-cores (which OEMs eat up), it is beginning to bleed low-end market share to Intel. This hurts nVidia as well because they still move a lot of 6100/7100 series chipsets, packaged with everything from Semprons to Phenoms, and unfortunately very few OEMs are willing to shell out for an Intel-supportive nVidia 9000 series chipset when they can get an Intel-made one much cheaper and keep the whole platform under one umbrella.

Most people still buy their computers pre-built... Unfortunately while most tech-savvy consumers see the very clear economic advantage of AMD's 4000 series, contrary to what we may think, we do not make up the majority of the market.

RE: still haunts? um, what are you smoking?
By defter on 3/2/2009 1:26:14 PM , Rating: 2
Be that as it may, they aren't bleeding the way nVidia is.

NVidia made significant profits while AMD made just losses during the past two years.

By reaperrr on 3/2/2009 2:09:56 PM , Rating: 2
I think he was referring to the current situation.

AMD is about to release Radeon 4890, lower prices for 4850 and 4870 significantly, release 4750/4770 at VERY competitive prices, release more RV7xx mobile chips, and unlocking the 4th core of X3 chips is only possible on 790GX boards. Nvidia will either lose marketshare in notebooks, desktop chipsets and discrete graphics, or will be forced to reduce prices of products that are already making hardly any money.

Their GT21x 40nm-Chips are seemingly delayed to Q3, at least one of them cancelled completely, and all "new" products planned until then are rebrands of existing parts with lower prices.

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain
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