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AMD gives up its share in GlobalFoundries

MrSeb (471333) writes | more than 2 years ago

AMD 1

MrSeb writes "Three years ago today, AMD spun off its fab division, in a move the company claimed would allow it to more effectively leverage its assets, inject new capital into the foundry side of the business, and make it more competitive vis-à-vis Chipzilla. Today, that dream is dead. AMD announced today that it would give up its 8.8% equity stake in the company. When AMD created GlobalFoundries in 2009, the company held a 34.2% share in the foundry. The main thing that AMD gains from this deal is manufacturing flexibility. Previously, Sunnyvale had agreed to manufacture 28nm APUs solely with GlobalFoundries. This new agreement voids that arrangement, freeing AMD to work with TSMC and other foundries.. It’s not an agreement that came cheap, though — not only is AMD giving up its 8.8% equity share of GF, it’s agreed to pay the manufacturer some $425 million by the end of Q1 2013. AMD will take a $703M charge against the transaction. It's unclear how this move will pan out. We know AMD killed Krishna/Wichita due to manufacturing problems, Llano limped along for most of 2011, and GF’s problems at 32nm impacted AMD’s ability to sell 45nm chips into the channel. From a macroeconomic perspective, AMD is simply transferring its business to a foundry partner that’s more able to meet its needs. One could argue that AMD’s decision to get out of the foundry business is a logical extension of new-CEO Rory Read’s plan to de-emphasize cutting-edge silicon in favor of SoCs. Time will tell."
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1 comment

Outsourcing production. (1)

Mal-2 (675116) | more than 2 years ago | (#39253369)

We all know how well outsourcing production has worked at the national level. While it paid short-term dividends, it led to a situation where another country controls the production means for another... and consequently holds them hostage economically. AMD may think it has a duopoly-share (with Intel) of the x86 chip design market (and with nVidia in GPUs), and I suppose it does... FOR NOW. This move means that as others step into the arena, AMD will be in no position to muscle them out of the market or buy them as it did with Cyrix and ATi. They may remain in a strong position for some time, but this sets the stage for their eventual slide into irrelevance and obscurity. Of course, if they DIDN'T do this, they may well have died of attrition from an inability to ship product NOW. It's not an enviable position to be in. It appears they have chosen to starve slowly rather than quickly.

Of course, there is no law that says they can't buy or build fabs later. I just think it rather unlikely, since their fab issues and financial position that led to selling in the first place are unlikely to significantly improve.

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