AMD to Oustource CPU Manufacturing to TSMC

Yesterday Digitimes reported:

In addition to its GPU production, AMD is planning to also outsource CPU production to Taiwan Semiconductor Manufacturing Company (TSMC) in the second half of this year, according to industry sources.

Although Hector Ruiz, CEO of AMD did not mention any plans to outsource production during the company's recent investors conference, the industry sources revealed that TSMC has already started testing procedures for a SOI manufacturing process in order to land manufacturing orders for AMD's Fusion CPUs.

This is speculation however many believe AMD are trying to reduce their operating costs to become more competitive. If the outsourcing goes well they will be able to sell some of their manufacturing equipment and recoup some money too. This comes as no surprise. IC Insights predicted AMD would possibly look to become fabless in their recent ranking of the top IC foundries. In a press release, IC Insights said:

Considering its 1Q08 financial results, AMD could be a company that is forced to go fab-lite or possibly completely fabless in the near future.

AMD have recently been hammered by Intel and are trying to return to profitability. Divesting from their manfuacturing is one way to reduce costs, especially fixed overhead. To be honest, AMD products are not bad at all and have sufficient power and functionality for most day-to-day computing tasks. However, when you set yourself up as a competitor to a cash rich company like Intel, there will be problems since Intel have been known to initiate price wars and scale up their technology whenever they are threatened.

I hope AMD can return to profitability and continue to innovate. A few years ago Intel made a few mistakes and gave AMD an edge in the market. AMD even came to dominate the desktop chipset market in Q1 2006. Having an alternative in the market put pressure on Intel to innovate and be creative. I am sure that some of Intel's innovation has been driven by AMD's competitive pressures.

Article 1: AMD planning to outsource CPU production to TSMC in 2H08, say sources
Article 2: IC Insights Ranks Top Foundry Suppliers
Article 3: AMD vs Intel -- the stakes get higher (2006 article)