Advanced Micro Devices Inc (AMD)

[SemiconEng]

Semi, the only piece of the analysis that was left out (and its a big piece), is the increase in the number of chips produced per wafer with the smaller geometry process. This presumably represents a great deal of incremental revenue.
Question is will the extra revenue offset all the headaches you outlined? Is it in fact like buying a new fab on the cheap?


I'm no Industrial Engineer, they figure out this Layout/Throughput/Labor Investment return, so it's a WAG, but I think the investment return may still not be there. The reason I say that, is that while smaller geometry process would generate more chips per wafer, the scenerio of using equipment that previously manufactured microprocessors, to manufacture Flash, would return less revenue, since Flash sells for less than microprocessors. You'd have to crank out allot more flash chips to make up the revenue difference.

If you were reusing the equipment to make cheaper microprocessors, then the investment return might be worth it. On the other hand, the equipment itself would likely already be fully depreciated and paid for, and if the people Installing and Qualifying the equipment were already familiar with it, to minimize the issues...... it might pay off. It would be close.

So, my bottom line WAG is, as a Bean counter, in a company with tight resources, and not much money for new equipment, I MIGHT go for it. As an Install/Qual Engineer, or as a Process Engineer, I'd hate it. So if I were AMD, in their current financial position, and it were my decision, I'd get my best Equipment and Process people and try it....... One time. If it worked, great, if it didn't, Not much to lose, eh?

Semi