AMD's Asset Smart Strategy: What is it?

An excellent article on the Guardian covers most of what AMD have been going through over the past couple of years. The Guardian writes:

Advanced Micro Devices Inc's future depends on still-murky details of a plan to overhaul its manufacturing, and Wall Street is impatient.

AMD now lags far-larger rival Intel Corp in chipmaking technology and could be about nine months behind Intel when it introduces chips with elements as small as 45 nanometers in the second half of this year.

The company has also reported seven straight quarterly net losses in a row, and it's hard-pressed to afford building a new, next-generation chip plant, which can cost $3.5 billion, with $5.6 billion in long-term debt on its books.

Together, Intel and AMD control virtually the entire market for microprocessors, the electronic brains of personal computers and server computers that comprise corporate networks.

AMD's future hinges on what it calls Asset-Smart strategy: whether it adds capacity by striking a deal to use foundries of an Asian contract chipmaker such as Taiwan Semiconductor Manufacturing Co Ltd, or perhaps signing an agreement with longtime partner International Business Machines Corp.

"I don't know what Asset-Smart looks like, but anything is better than today. Anything is better than going out of business because you run out of money" said Stifel Nicolaus analyst Cody Acree. "It might be a partnership with IBM or TSMC or it might be an outright sale of their manufacturing."

Executive Chairman Hector Ruiz, who led AMD as its CEO for more than six years and stepped aside in mid-July to hand the reins to Dirk Meyer, is driving the plan to completion and has repeatedly promised answers by the end of the year.

We have been following this story for some time and the above quotation is a good summary of the situation as it stands now. Honestly, good luck to AMD to staying in the game. I personally think much of the innovation and acceleration in product design by Intel has been because of AMD punching above their weight. Without at least a minor competitor how fast will Intel develop products? I recall earlier this year Intel wanted to delay the rollout of some processors as there was no reasonable external competition and they felt the newer processors would compete directly with their earlier generation of processors. They denied the rumor but it wouldn't be out of the realm of possibility. Ultimatey this doesn't benefit the consumer.

Also, the brutal price war between AMD and Intel has signifcantly lowered the prices of processors. If AMD are pushed out of the game, Intel will monopolize the market (haven't they already?) and set prices as they please similar to what Mircrosoft does.

So seriously, here's hoping AMD can pull out of their slump and get back in the game, with or without fabs.

Guardian: AMD manufacturing plan key to chipmaker's future