Analysts think AMD could pull out of manufacturing

— 9:57 AM on June 19, 2007

It's no secret AMD has taken a beating over the past couple of quarters. Multiple factors, like its aggressive price war with Intel and the delay of its R600 graphics processor, caused AMD to lose a net total of $1.185 billion between September 2006 and March 2007, and the company announced back in April that it would restructure its business model as a result. According to a report by InfoWorld, some analysts are now predicting AMD's restructuring will go farther than expected—far enough that the firm might pull out of the manufacturing business and become entirely fabless as early as next year.

This is all speculation, naturally, but there may be a hint of truth to it. InfoWorld quotes AMD spokesman Drew Prarie as saying the rumor arose from a "speculative" Goldman Sachs report, but that AMD is indeed attempting to focus more on chip development than manufacturing. Its research and development partnership with IBM, as well as a manufacturing deal with Chartered Semiconductor and the fabless nature of its new graphics division, could be but the tip of the iceberg.

"We're looking to find ways to extend that model beyond research and development to the full range of the manufacturing supply chain," Prarie said Monday. "That could run the range from increasing the amount of processors we send out for chartered manufacturing, and could also include things like establishing partnerships on the manufacturing side."
InfoWorld also cites Citigroup analyst Glen Yeung, who argues the aforementioned plans may result in a "transitional move" by AMD on the manufacturing front. According to Yeung, that move could shape into AMD outsourcing low-end processors to Taiwanese fab TSMC and/or selling a share of its existing and future fabs.
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