Hi Sarmad,
The agreement has two parts.
Firstly a vital cash infusion for AMD which was on the verge of becoming moribund. The traditional sources of capital had evaporated, and the oil money was the only savior.
Secondly it tries to address the cost side of the AMD business model. The equipment depreciation cost and the engineering cost to start up a new process is very significant.But two years later it has to be scrapped, and AMD has to start another process. Intel uses its processes and Fabs for 4-5 years, and the engineering costs are amortized over much larger volumes. Thus Intel unit costs are much lower. Intel uses its older technologies on chipsets. AMD is is trying to get larger wafer volumes by making wafers for other customers, and get revenue from 2 year old processes which are very good value for non-microprocessor products.
But obviously the Foundry Company has to develop a new culture to interface with multiple customers, and multiple products.It will be entering a very competitive market. Most of the profit is made by TSMC with a few scraps for the others.There are a large number of companies like Samsung,Toshiba etc who make foundry wafers for others to gain incremental revenue, just like AMD is attempting to do now. The Foundry Companys only competitive advantage is a slightly more advanced process than the others, but it is going to be more expensive. It can provide a supplement to IBM Microelectronics Foundry business, but I doubt that it can make money.
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