AI
Saturday, November 14, 2009 1:18:21 PM
There has never been an x86 manufacturer of AMD's caliber running on a fabless model.
That is because AMD burned its furniture and sold off the
family silver to stay in the manufacturing game as long
as it possibly could. Why? Because there is significant
advantage for both product margin and design quality for
high end processors doing it all (device design, process
design, and manufacturing) under one roof. The beginning
of the end of Alpha supremacy was when DEC divested
its Hudson fab to Intel and went on to a foundry model. It
never again had the huge performance and technology
lead ADT had vs everyone else in the early to mid 90s.
It is all pretty simple actually. When manufacturing at
AMD was spun off into a seperate corporate entity, GF,
a bunch of things happened. First of all a new level of
corporate overhead, SG&A, springs up at GF which has
to be paid for from the per wafer price AMD pays to GF.
Secondly, all discussion between AMD designers and GF
process guys are now inter-corporate and there has to
NDAs signed and so on. It's no longer a case of simply
walking down the hallway for a casual chat. Thirdly the
guys at GF care about GF succeeding and that means
attracting new customers and non-x86 business. AMD
is the legacy customer that pays the bills for now but
anyone who has ever worked in the tech industry knows
how much attention legacy business gets compared to
the effort that goes into pushing into new areas and
gaining new customers. This will really kick in once
AMD divests the rest of its GF holdings to pay its bills.
It is amazing to me that anyone thinks that going fabless
will improve AMD's ability to hold let alone expand the
~17% of the x86 processor market it has now in direct
competition with the product design/process R&D/manu-
facturing moster that is Intel and make the profits that
will allow it to survive in the long run. I wonder how many
families in economic distress think it makes sense to
sell off their kitchen appliances and eat at restaurants
full time.
That is because AMD burned its furniture and sold off the
family silver to stay in the manufacturing game as long
as it possibly could. Why? Because there is significant
advantage for both product margin and design quality for
high end processors doing it all (device design, process
design, and manufacturing) under one roof. The beginning
of the end of Alpha supremacy was when DEC divested
its Hudson fab to Intel and went on to a foundry model. It
never again had the huge performance and technology
lead ADT had vs everyone else in the early to mid 90s.
It is all pretty simple actually. When manufacturing at
AMD was spun off into a seperate corporate entity, GF,
a bunch of things happened. First of all a new level of
corporate overhead, SG&A, springs up at GF which has
to be paid for from the per wafer price AMD pays to GF.
Secondly, all discussion between AMD designers and GF
process guys are now inter-corporate and there has to
NDAs signed and so on. It's no longer a case of simply
walking down the hallway for a casual chat. Thirdly the
guys at GF care about GF succeeding and that means
attracting new customers and non-x86 business. AMD
is the legacy customer that pays the bills for now but
anyone who has ever worked in the tech industry knows
how much attention legacy business gets compared to
the effort that goes into pushing into new areas and
gaining new customers. This will really kick in once
AMD divests the rest of its GF holdings to pay its bills.
It is amazing to me that anyone thinks that going fabless
will improve AMD's ability to hold let alone expand the
~17% of the x86 processor market it has now in direct
competition with the product design/process R&D/manu-
facturing moster that is Intel and make the profits that
will allow it to survive in the long run. I wonder how many
families in economic distress think it makes sense to
sell off their kitchen appliances and eat at restaurants
full time.
