If AMD gets out of the fab business, the future's going to be a lot gloomier

If AMD gets out of the fab business, the future's going to be a lot gloomier

Summary: It's been a really rough year for AMD. Losing market share to Intel is bad enough, but doing so at a time when the company took on $2 billion of debt and lost $1.2 billion over a six month period is really bad. AMD is now looking for ways to cut costs, and if it's not careful, things will get a lot worse.

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TOPICS: Processors
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It's been a really rough year for AMD.  Losing market share to Intel is bad enough, but doing so at a time when the company took on $2 billion of debt and lost $1.2 billion over a six month period is really bad.  AMD is now looking for ways to cut costs, and if it's not careful, things will get a lot worse.

Back in July of last year I wrote about how I saw a gloomy future for the company.  Many people thought I was being far too pessimistic.  Now, almost a year on and AMD's future is looking far gloomier as the company looks for ways to stem the cash hemorrhage.  One idea that's apparently under consideration is for the company to get out of the fabrication business and outsource all the work.

I'm pretty sure that closing the two fab plants that AMD currently operates (Fab 30 and 36) would mean a dramatic drop in costs in the short term, but in the long term it could be a disaster.  One of the problems that has been plaguing AMD is the glacially slow process of getting new processors manufactured and out the door.  While companies like Texas Instruments and Sony can get away with outsourcing chip manufacture because their business models can accommodate for the increased time it takes to get a third-party fab to work with their designs, this could be fatal for a company like AMD which has to be able to get new products out of the door as fast as possible in order to compete.  It's doubly fatal when your competitor is Intel and will pounce on any mistake you make.

AMD needs to focus on what made it successful in the first place - fast, affordable processors.  Buying ATI might not have been the best move in terms of strategy, but pursuing fanciful technologies like Quad FX was an even worse idea because the company was chasing the fickle, high-end, low-volume gaming market.  The focus now should be bringing to market a serious competitor to Intel's Core 2 line.  Without a product that matches or betters this line, AMD's future is going to be gloomy no matter what it does.

Thoughts?

Topic: Processors

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8 comments
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  • Was ATI a bad move?

    Right now ATI is on the up, with heinous complaints about nVidia's Vista drivers, a core rewrite of the Linux and XP drivers (based on the much more solid ATI Vista drivers) almost finished and increased cache with the open source community with the pending opening up of these drivers it ATI's future is looking brighter all the time. nVidia's certainly going to have to work hard to maintain their position anyway.
    odubtaig
    • Dreamer

      Both ATI and nVidia have been getting bashed for their drivers. nVidia also beat ATI to market with a fully DirectX 10 video card. Increased cache with the opensource community is worth the price of a cup of coffee. By becoming part of AMD ATI also has burnt some serious bridges with Intel. All in all I wouldn't say that ATI is having a great year anymore then AMD is.
      ShadeTree
      • Really?

        If there are (estimated) 30Million Linux users who can all guarantee that an ATI card is going to work out of the box without all that fiddling with stopping and starting of X and reinstalling the drivers every time there's a kernel update, how much do you think that's worth in hardware sales? More than a cup of coffee.

        I've also not seen a great deal wrong said about ATI's Vista drivers; now nVidia may have been first to market with a DX10 card, but that's as much use as a fart in a jar when the drivers are broken.
        odubtaig
  • My first thought...

    ... is that any blog that ends with "Thoughts?" was written by someone who isn't sure what s/he thinks but that needs either page views or talkbacks to justify the blog.

    Most bloggers put their opinions out there and wait for the controversy that inevitably comes. Asking for that controversy? Sounds a little bit desperate.
    bidemytime
    • My first thought...

      In your opinion perhaps but then your tossing out your own form of bait!
      aussieblnd@...
  • R&D is important - can't leave that up to just Inthell. still have to focus

    on the economic stability first.

    buying ATI could be a great move if they start selling a lot more motherboards with ATI graphics.

    but i don't see it happening.
    ECS and others are too well connected to lose market.
    and nvidia's onboard graphics are better.
    so it will take too much investment to see a return on that.
    wish it were different.

    hope AMD pulls it out and keeps on chuggin'.
    (AMD influence has made a real improvement in ATI quality)

    :)

    .
    wessonjoe
    • can't leave that up to just Inthell

      But on the other hand, in the case of laptops at least make the dang things upgradeable. Try the Sony S series notebooks that have ATI Mobility Radeon 9200, non removable not upgradeable and therefore non supportable for Aero under Vista, although everything else about his book meets Vista standards and frankly run's Vista very well just not Aero interface.
      aussieblnd@...
  • Out of the FAB business I think not!

    I don't own and never will own an Intel computer. I have 6 computers all AMD powered. The products are wonderful, never have any problems with them. As long as the quality stays up there I will stand behind them. Although I am still waiting for a 64/Tri core. QUAD?
    How about a 128/dual. Pipe Dream?
    aussieblnd@...