Intel Corp (INTC)

[Elmer Phud]

Did these guys copy Yousef's and my posts?

http://www.siliconstrategies.com/story/OEG20030109S0047




SBN Spin: Why did IBM and AMD form an alliance?
Semiconductor Business News
(01/09/03 05:06 p.m. EST)

The New Year has barely started, but there has already been a blockbuster announcement in the industry, when Advanced Micro Devices Inc. on Wednesday formed a technology alliance with IBM Corp.

As reported, AMD and IBM agreed to develop together process technologies for high-performance logic products and microprocessors, at 65- and 45-nm critical dimensions. The first chips built using the technology are expected in 2005 (see Jan. 8, story ).

The deal apparently marks an end to AMD's arrangement with United Microelectronics Corp., a Taiwan-based foundry with which AMD was to develop process technology and build a 300-mm fab in Singapore (see Jan. 8, story ).

So why did AMD leave UMC in the dust and strike a deal with IBM?

There are several theories floating around the market, but perhaps the overriding reason seems clear: troubled AMD needs a stronger partner like IBM to compete against Intel Corp. in the microprocessor business, according to analysts.

Here's another way to put it: AMD's future is doomed--if it continued to work with its now former and fading technology partner in UMC, according to analysts.

AMD has been spilling red ink for several quarters, and, needless to say, is also falling behind Intel in terms of market share in processors, according to analysts. At the same time, the official roll out of AMD's next-generation, 32/64-bit processor line, code-named Hammer, has been delayed.

Fearing that it will fall even further behind Intel, AMD needed a new and stronger partner--and for good reason. “AMD could be dead by year's end,” according to an analyst in Asia, who tracks the semiconductor industry. “The scary thing is that Intel is ramping up two 300-mm fabs in 2003, and there will be lots of room for Intel to lower its CPU ASPs,” the analyst said.

“So, AMD will need the backing of a strong tech partner--IBM--and a loaded financial provider--Chartered/Singapore government--to stay afloat,” the analysts said, referring to IBM's recent deal to forge an alliance with foundry provider Chartered Semiconductor Pte. Ltd. (see Oct. 26, 2002 story ).

What happened to the AMD and UMC alliance? After all, UMC has the capital the fund the development of a 300-mm fab, but AMD reportedly may have been unhappy with the arrangement. “We have heard AMD's CPU yields at UMC are as low as 10-20%,” according to analyst.