Advanced Micro Devices Inc (AMD)

[bobs10]

The most interesting part of the post about IBM for me was:

Mr. Joyce said the semiconductor business was hurt because it received $100 million less from selling patented technology this year than last year, but he said that will be made up in the current quarter because of the sale of technology to Applied Micro Circuits Corp. However, he said the percentage of good chips produced at the year-old semiconductor plant in East Fishkill, N.Y., still is too low for profitable operation.

Me...
A couple of things:

They got $40M from AMD last year so this sharing of technology has got to be helping AMD's R&D expenses. It's worth noting that IBM is primarily a services company, and the hardware it sells, for the most part, is Big Iron stuff. The small amount of PC type products it sells aren't profitable by themselves, so it makes perfect sense for IBM to partner with AMD to reduce fixed costs. The synergy should be enormous. I’m sure some of the things learned are even applicable to Big Iron manufacturing.

2nd, not getting the Fishkill unit up to profitability has me a little concerned. I know management says things are going fine, but the start of 90nm production has been delayed, at least a couple of weeks, perhaps because bin splits are ok, but yields aren't? I hope it's just my suspicious nature, but I hate red flags. You would think that IBM would have used AMD's process technology to improve yields if AMD is really ready to go into 90nm production.