Rumors of a split have been circulating for some time (this is obviously what the AMD board meant when they talked about "Asset Light/Asset Smart") and it seems that the split will happen just as predicted. AMD will break up into one company that is focused on designing processors, and another that manufactures them. The two companies will also see some $6 billion in new funding from two Abu Dhabi investment firms.
OK, a split's all very well and good, but here's what really matters - will the split make AMD1 and AMD2 (let's call the two companies that for now) any more competitive than a single AMD? Well, it's possible, but the fact remains that the AMD that's split into two will be doing pretty much what the existing AMD does - design and make processors. It may be that the two companies will be able to attract business from elsewhere but I have doubts that this will amount to much in the way of income, especially in the short term. A split AMD will be doing pretty much what AMD is doing already - competing with Intel.
And that's the problem. The reason that AMD has seen quarter after quarter of losses is because the company has found it impossible to compete against Intel. AMD is especially outgunned in the desktop market segment. So the worry is with this AMD split is that it focuses on restructuring the company but not on what really matters - delivering innovative products.
If I were an investor, here's what I'd like to see from AMD:
Profits??? Where are they going to come from?
A clear roadmap of how the company is going to become competitive in the face of Intel (we all need AMD to be competitive, if you doubt this, look at how stagnant the top end of Intel's price list has become).
Present effective leadership which is capable of delivering on the roadmap.
Where does ATI fit into the big picture? AMD has made some progress in leveraging the GPU company but there's still a lot more the company could be doing to leverage the combined power of the CPU and GPU.
The economy is facing a tough time - how will this affect AMDs recovery plan? We need to see every plan through a realism filter based on the current financial climate.