Advanced Micro Devices Inc (AMD)

[P2O I'm from MO]

Bruno: AMD chief remains optimistic: Senate leader cites deadline; company terms Dresden sale report a "rumor"

Larry RulisonAlbany Times Union, N.Y.

Released : Wednesday, November 14, 2007 3:00 AM

Nov. 14--SCHODACK -- State Senate Majority Leader Joseph L. Bruno was on the phone Tuesday with Hector Ruiz, chief executive of Advanced Micro Devices Inc.

Bruno, R-Brunswick, was about to walk into a luncheon with the Rensselaer County Regional Chamber of Commerce, at which he was the guest speaker, and said he wanted to be able to give the audience the latest on the computer chip maker's plans in Saratoga County. AMD is looking to build a $3.2 billion "chip fab" at Luther Forest Technology Campus in Malta.

"He said 'We're very optimistic; we're very excited about implementing our plans,' " Bruno said of his conversation with Ruiz.

Those were encouraging words for the audience of mostly businesspeople, especially as AMD has been struggling financially, losing $1.6 billion in the first nine months of the year.

The company is denying speculation by at least one stock analyst that it plans to shed one of its two fabs in Dresden, Germany. On Monday, Barron's magazine reported on its Web site that AMD is in talks to sell its Fab 38 in Dresden to Taiwan Semiconductor Manufacturing Co. The story used a report by Jefferies & Co. analyst John Lau as its source.

"While this is not the ideal situation for a microprocessor company, it seems to be the most practical for AMD due to their cash-flow issues," Law wrote, according to Barron's.

AMD spokesman Travis Bullard said Tuesday the Barron's report is simply "a rumor," and that AMD's plans to convert Fab 38 to newer technology by 2009 "remain on track."

Bullard also said Dresden "remains the cornerstone" of the company's manufacturing operations. And he stressed the company's new "asset smart" strategy (previously called "asset light") should not be misinterpreted as a move to a fabless manufacturing model in which AMD would move away from using its own fabs and outsource manufacturing to so-called foundries like Taiwan Semiconductor.

Such a model would put the need for a new factory in Saratoga County in jeopardy, say analysts who follow AMD.

"AMD is not moving toward a fabless model," Bullard said.

At the luncheon Tuesday, Bruno reminded the crowd that AMD has until July 31, 2009, to make up its mind about whether to build at Luther Forest and still be eligible for $650 million in cash, part of a $1.2 billion incentive package from the state.

Bruno said Ruiz told him once again that building a state-of-the-art site at Luther Forest will help AMD compete with its largest rival, Intel Corp., which has about 80 percent of the market.

"In order to stay in that business, they've got to stay on the leading edge," Bruno said. "They have a vision, and they know that they have to invest in their own infrastructure to stay competitive."

After the luncheon, Bruno said he called Ruiz because he knew the company was planning to give the public an update on the Saratoga County project's progress by the end of the year, and he didn't want to be "second-guessed" by anyone on the company's intentions.

"I wanted to hear from him," Bruno said. "He's excited, very positive. I was glad to hear that." Rulison can be reached at 454-5504 or by e-mail at [e-mail].

To see more of the Albany Times Union, or to subscribe to the newspaper, go to http://www.timesunion.com. Copyright (c) 2007, Albany Times Union, N.Y. Distributed by McClatchy-Tribune Information Services. For reprints, email [e-mail], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.