Globalfoundries Getting in on the Game

Competition in the pure play foundry industry is about to heat up. ars technica has an interesting blog article on AMD's spinoff company Globalfoundries who seem to be on thr prowl for TSMC and UMC customers. ars technica writes:

It's launched, online, and the now-independent Globalfoundries is searching for its non-AMD customers. CEO Doug Grose is reportedly visiting Taiwan to seek relationships with companies that may be currently contracting with TSMC or UMC for their semiconductor foundry needs. If true, this would raise questions regarding the future of AMD's relationship with TSMC. That company currently fabricates Radeon processors for Advanced Micro Devices, and while Globalfoundries and AMD are now separate entities, they are separate entities that remain joined at the hip. Globalfoundries will probably take over fabbing ATI Radeon processors at some point, but is not yet believed to have the bulk silicon production in place to do so.

So what are your thoughts? Will Globalfoundries actions in Taiwan threaten the relationship between AMD and TSMC? Will Globalfoundries be able to compete effectively? Are TSMC and UMC in a world of trouble? I will be interested to read your comments. In the meantime, I look forward to see how the pure-play foundry industry landscape changes. (Remember last week TSMC and Intel signed an agreement). The future is always exciting, especially in this industry

ars technica: Globalfoundries on the prowl for non-AMD customers

Morris Chang Predicts Three Year Recovery

Interview in the Wall Street Journal, Morris Chang anticipates the semiconductor industry will take three years to recover to 2008 sales levels. The pounding the semiconductor industry has taken over the past few months due to the financial crisis has forced semiconductor sales to drop dramatically. According to the WSJ:

The global semiconductor industry has yet to hit bottom and likely won't recover fully from the current downturn for another three years, according to one of the industry's senior figures, Taiwan Semiconductor Manufacturing Co. Chairman Morris Chang.

In an interview Friday, Mr. Chang said the industry, which has been hard hit by the global economic slowdown, was "pretty close" to the bottom. But he said that a return to the sales volumes that the industry had before the current slump would be extremely slow. "You get a precipitous drop and a very slow rise," he said.

"I think it will be 2012 before the total revenue of the semiconductor industry gets back to the '08 level," said Mr. Chang, who founded Taiwan Semiconductor in 1987.

The WSJ continues:

Mr. Chang also said he expects industry consolidation to pick up. He predicted a continued decline for companies that make both consumer products and semiconductors. Of the companies that still do both, he said that only Samsung Electronics Co. and Intel Corp. are in a strong position. He said others would likely divest themselves of their semiconductor operations, leaving production to companies like TSMC, which manufactures semiconductors on a contract basis for other companies.

Mr. Chang has worked in this industry for a long time and his thoughts do carry some weight. It will be interesting to see how this all pans out over time, especially the consolidation of the foundry industry. What will be more interesting will be to see how the new foundry company being spun off will survive. The foundry business is a tough business to play and one can only imagine the perils of entering the industry at this point in the economic cycle.

Wall Street Journal: Executive Sees Chip Industry Recovery in Three Years

AMD Split and Implications for TSMC

I am scratching my head here a bit because I just read an article on internetnews.com that looks at AMD's foundry spin-off (The Foundry Company) competitive targeting of TSMC. The reason I am scratching my head is that they claim AMD will have a technological advantage over TSMC because they already have 45 nm processing technologies in place. According to them (emphasis added):

With a long-term goal of being a player in the semiconductor foundry space, TFC now has its sights set on TSMC and other established players. But it won't have the capacity to go head-to-head, notes Spooner. While TSMC has 11 fabs, AMD had only its Dresden facility and its planned New York facility, which is years away from completion.

But TFC will also have an advantage of being much more cutting-edge in its manufacturing capabilities than TSMC, putting it closer to Intel. TSMC is just reaching 55 nanometer die sizes, while AMD, thanks in part to a technology alliance with IBM, is at 45nm and heading to 32nm.

The Foundry Company will join IBM's joint development alliance, a group of leading semiconductor companies collaborating on next-generation silicon technologies, with the ultimate aim of reducing die sizes to 22nm.

This means mean TFC can go gunning for TSMC customers. TSMC has an impressive collection of customers, including Broadcom, Conexant, Marvell, NVIDIA, VIA and ATI, which AMD now owns.

"The Foundry Company will be aimed at the very high end of the market, because they will offer very cutting-edge technologies and will be able to come to market before TSMC," Spooner told InternetNews.com. "I'm not sure how much revenue they can generate going forward. It all depends on how quickly they bring on partners."

This will also let TFC invest more heavily in the fabs than AMD could have all by itself, and it can make more money by making chips for other firms than AMD. AMD's fabs have some problems, most notably they don't use 300 millimeter wafers yet, they still use 200 mm.

A larger wafer means more chips can be made at once, and thus reduce manufacturing costs. Spooner said that with the backing TFC now has, it can make that transition.

First up, TSMC does have a 45 nm fab. All one needs to do is check their website here and you will see the following graphic:

Notice they do have at least one 45 nm fab with an additional two in the works and a plan for three 32 nm fabs. They also seem to have plans for 28 nm processing technology by 2010. TSMC is very competitive in the foundry business and should not be taken lightly.

There is also an issue of long term contracts and established partnerships with TSMC. TSMC also has a great deal of knowledge of how to be competitive in the pure-play foundry industry. AMD spin-off The Foundry Company (TFC) may have big ideas, but it will not be as easy for them. They are going up against a smart competitor with large market share. Remember the last time they did that against Intel they lost.

At any rate, I guess TFC knows more about TSMC's capabilities than either me or the author of that article and I am pretty sure they will not enter this market naively. If they do, they will be in trouble.

Internetnews.com: AMD Dumps Fabrication Plants

AMD Loses Their Manhood

In July in Is AMD Going to Spin-Off their Manufacturing we noted foundry industry observers were commenting AMD were going to have to spin-off their fabs to stay viable. Later we noted in AMD's Asset Smart Strategy: What is it? AMD had adopted an asset-smart strategy. Although this strategy was not clear it was predicted that AMD meant they would be dumping their fabs. Well, its come to pass. AMD will no longer manufacture their own chips. According to the New York Times (NYT) AMD are going to split into two companies. One will focus on chip design and the other on manufacturing. According to the NYT:

Advanced Micro Devices said Tuesday that it would split into two companies — one focused on designing microprocessors and the other on the costly business of manufacturing them — in a drastic effort to maintain its position as the only real rival to Intel.

In addition, the company said two Abu Dhabi investment firms would inject at least $6 billion into the two firms, mostly to finance a new chip factory that A.M.D. planned to build near Albany, N.Y., and to upgrade one of the company’s existing plants in Dresden, Germany.

A.M.D., based in Sunnyvale, Calif., makes graphics, computer and server processors. It will own 44.4 percent of the new entity, which has been temporarily named the Foundry Company, a reference to the technical term for a chip factory. The Advanced Technology Investment Company will own the rest.

Advanced Technology, which was formed by the Abu Dhabi government, has promised to put up $2.1 billion immediately and contribute $3.6 billion to $6 billion more to build or upgrade chip fabrication plants, also known as fabs. A.M.D. said the two companies would share voting control equally.

The Mubadala Development Company, an Abu Dhabi company that bought 8 percent of A.M.D. in November, will pay $314 million for 58 million newly issued shares, increasing its stake in the presplit company to 19.3 percent. It will also get warrants to buy 30 million shares. A.M.D. stock closed Monday at $4.23 a share, down 30 cents.

“We generally believe this deal is a game changer for the industry,” said Khaldoon Al Mubarak, chief executive of Mubadala. “It’s bold, and I think it’s smart.”

Coming up with the billions of dollars needed to construct each new chip plant has proved to be a huge drain on A.M.D., the perennial No. 2 to Intel in the market for microprocessors, the powerful chips that control the functions of personal computers and the larger corporate machines known as servers. As of June, A.M.D. reported that it had $5.3 billion in debt and just $1.6 billion in cash.

With the constant need to devise smaller, faster, more energy-efficient chips to keep up with Intel, A.M.D. was forced to turn to outside help.

Well this turn of events was certainly not unexpected. AMD have been smashed around for the better part of three years in a ruthless price war with Intel. They are on the ropes and there is nowhere to go except to be broken up and allow the latent value in either firm to be unlocked somehow.

This will however have an impact on the global semiconductor industry. A new foundry provider in these dark times will increase the competitive environment in the pure play foundry business and smaller competitors may feel the pinch of it. I suspect TSMC, the world's pre-eminent pure-play foundry, will not be effected initially but they certainly cannot ignore the emergence of a new player in the game.

So why is this piece titled "AMD Loses Their Manhood"? The NYT answers (emphasis added):

The split, which has been in the works for more than a year, did not come easily to A.M.D. According to company lore, A.M.D.’s co-founder and longtime chief executive, W. J. Sanders III, known as Jerry, once remarked that “real men have fabs.”

Under the deal proposed by A.M.D., the company would retain many of the traditional benefits of fabs, since part of Foundry will be dedicated to serving A.M.D. and will remain in close communication with the company’s engineers.

“We feel like we’re still pretty manly at A.M.D.,” Mr. Meyer said. Noting that Mr. Sanders made his quip over a decade ago, he added, “Frankly, the math has changed.”

Welcome to a whole new semiconductor landscape, the future will be interesting.

New York Times: A.M.D. to Split Into Two Operations

Is AMD Outsourcing?

The China Economic News (CENS) reports AMD has outsourced their 40nm CPU production to TSMC. According to CENS:

Some foreign institutional investors recently said Taiwan Semiconductor Manufacturing Co. (TSMC) has won foundry contracts to make central processing units (CPUs) for Advanced Micro Devices (AMD), the world`s No.2 computer-microprocessor supplier second only to Intel Inc.

They said the volume production would begin at the end of the second quarter next year and run with 40-nanometer process. The contracts, they added, would give a boost to the world`s No.1 silicon foundry`s revenue.

In reaction to the reports, TSMC`s executives haven`t made any comments, simply saying pursing CPU contracts has been one of the company`s plans. Industry watchers said the contracts coming in economic meltdown reflected TSMC`s unmatched technology and manufacturing service.

AMD`s farming contracts to TSMC has been within expectations of industry watchers expectations after AMD announced plans to spin off its manufacturing operation at the end of this year to focus on IC design. However, the contract-production schedule comes around half a year earlier than expected in light of the reported second-quarter 2009 production.

AMD has already contracted TSMC and United Microelectronics Corp. (UMC) to make graphic chips after merging ATI Technology, with TSMC offering manufacturing to newer chips whereas UMC offering service to its older chips.

Well, there was rumor from the new AMD CEO about their asset smart strategy and rumors have been going around for a while that AMD will be forced to get rid of their fabs (see AMD's Foundry Business). AMD has been in a brutal price war with Intel over the last few years and their purchase of ATI Graphics made it more difficult for them to move as they are heavily burdened with debt.

If they have entered into a partnership with TSMC then I think it will be win-win for both of them. AMD will be able to focus on designing competitive chips and will be able to offload their very expensive fabrication plants. Of course the news would be good for TSMC and would show further consolidation in the IC manufacturing industry. Remember last week we said Morris Chang predicted only three semiconductor manufacturing companies would be around in 10 years.

From a consumer perspective, a strong AMD is very important. AMD's superior product line a few years ago forced Intel's hand and made them develop better chips faster. It also reduced the overall processor prices and made computers cheaper. A semiconductor world without AMD would not be good. If outsourcing the manufacturing helps them to remain competitive in the design of chipsets and processors, then it is the right move for them.

CENS: TSMC Reportedly Wins AMD`s CPU Foundry Contracts

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

AMD's Foundry Business

As we have noted on and off over the past AMD seems to be becoming an asset-lite or fabless design house (see Is AMD Going to Spin-Off their Manufacturing). AMD have denied they are spinning off their manufacturing and insist they will keep their fabs. The problem is if they keep their fabs they will be less competitive against Intel as the fabs suck up a lot of money. The relevance of this to Taiwan tech firms is that if they do spin-off their manufacturing, the chances are they will use Taiwan's pure-play foundries to manufacture their products. An excellent commentary on EE Times highlights the difficult choices facing AMD.

EE Times says:

In the future, AMD is supposedly planning to split the company into two parts. It will supposedly spin out its manufacturing unit, turning AMD into more or less a design house.

The manufacturing spinoff may take ownership of AMD's fabs, especially its leading-edge plant in Dresden, Germany. Reports have surfaced in the media that AMD will also have its parts made on a foundry basis by Chartered, TSMC and possibly United Microelectronics Corp.

Sources say otherwise. TSMC is expected to get the lion's share of AMD's foundry business--leaving Chartered on the outside looking in, according to one source. Chartered may make some of AMD's products, but the many of AMD's key parts have already migrated to TSMC's fabs, according to the source.

In any case, the strategy is risky. There is little or no evidence that a foundry can keep up in the high-volume processor game against Intel. Foundries can make processors, but they have typically worked with small, third-tier suppliers over the years. Competing with Intel is a different story.

On second thought, there's a good change the strategy will succeed. By the time AMD makes its asset lite announcement--and based on the company's recent execution--the processor vendor could lose what's left of its status and become a second- or third-tier player.

Maybe not a third-tier player, but one that is fighting to stay relevant.

I find it interesting the commentary argues the foundries won't be able to maintain their high-volume processor manufacturing. I don't think the pure-play foundries have ever competed with Intel directly as the business models are different. I imagine the problem here would be the utilization rates of the fabs. To compete evenly with Intel a significant amount of the fabs processing capacity will have to be used to manufacture the processors. This will have a negative effect on the pure-play foundry's other customers. Its an interesting dilemma that they will have to solve themselves.

EE Times: Commentary: Who won AMD's foundry business?

AMD vs. Intel

An interesting story over the past few years in the processor industry is the brutal price war between Intel and AMD. The price war has shattered AMD and left them struggling for survival with suggestions they might have to give up their fabs and go fab-lite or fabless. The war was started by Intel and then Hector Ruiz, the then CEO of AMD, used the price war to try and gain market share. However, delayed product rollouts by AMD and losing the performance advantage they had for a short while meant a loss of market share and a change in AMD leadership. Of course, one of the big causes of the business downturn was the purchase of ATI by AMD which was in excess of US$1 billion.

In the meantime, AMD has long accused Intel of unfair business practices. A trial pertaining to AMDs complaints is set to start in 2010 and will continue for an extended period of time. The Mercury News writes:

Buried in more than 150 million pages of documents compiled in the legal dispute between Silicon Valley chip makers Advanced Micro Devices and Intel is a remarkable tale of alleged corporate nastiness that could keep the courts and regulatory bodies buzzing for years.

AMD claims its larger rival Intel has used under-the-table payments, threats and other "dirty tricks" to deter computer makers from buying AMD's semiconductors. It says Intel, among other wrongdoings, offered a Tech Data executive a $1 million bribe, browbeat Acer into backing out of an AMD promotion and sold software that crashed computers running AMD chips.

The pages of AMD's suit accuse Intel of so many acts of market intimidation they "read like a chapter from 'The Godfather,' " according to Nathan Brookwood, a research fellow at the Saratoga market consulting firm Insight 64.

Intel insists it has done no more than provide legitimate incentives to use its products and that its business practices have helped keep computer costs low.

Still, the accusations by AMD - whose stock has plunged in recent months to nearly a 20-year low - have sparked a worldwide furor. Authorities in Japan, South Korea and Europe also have accused Intel of wrongdoing. Moreover, the Federal Trade Commission and New York's attorney general in recent months have launched investigations into its practices.

How all this plays out could have multibillion-dollar implications for both companies as well as for consumers, experts say. But determining what really has gone on in the chip industry could prove monumentally daunting.

A special master assigned to the case estimated that the documents dredged up by the suit so far would produce "a pile 137 miles high." Yet depositions with key industry figures are just beginning and the fact-finding could drag on for years.

"This case is on track to be the largest in terms of discovery in the history of civil litigation," said Intel spokesman Chuck Mulloy.

This case will be interesting to watch over the next few years. I am just glad I will not be the one reading the 150-million pages entered into evidence!

The Mercury News: 'Dirty tricks' or fair play by Intel in rivalry with AMD?

Is AMD Going to Spin-Off their Manufacturing

A recent story has emerged that AMD will soon spin-off their manufacturing plants. AMD have, over the past few years, been in a brutal price war with Intel that has left the future of AMD in doubt. There was already speculation about AMD outsourcing most of their manufacturing earlier this year. In AMD to Oustource CPU Manufacturing to TSMC we observed IC Insights predicted AMD may have to go fab-lite or even fabless. Earlier this month the Austin American Statesman broke the story that AMD would be splitting into several different companies.

According to the Statesman:

Executives have essentially guaranteed Wall Street that AMD will achieve an operating profit in the second half of the year. And Meyer says the company is just months away from a major restructuring that will spin the manufacturing operations off into a separate company, wth new ownership.

Without the expensive manufacturing operations, AMD can concentrate on designing, marketing and selling chips that compete effectively against its two tough competitors - Intel Corp., the largest and richest company in the semiconductor industry, and Nvidia Corp., the foremost maker of graphics chips.

AMD have now denied this claim. EWeek has said:

Advanced Micro Devices is planning to keep its fabs for now.

AMD is denying a report that appeared in the Austin American-Statesman that contains an interview with new CEO Dirk Meyer that seemed to indicate that the chip maker was preparing to spin off its manufacturing facilities in Germany and sell its two fabrication plants, or fabs.

Interesting! AMD has been hammered. Without looking at the financials its hard to say either way whether they stand a chance of recovering. They are way behind in their innovation and while Intel are moving to 45nm technologies soon, AMD are still a long way off. Maybe they can stay in the fight. Who knows? But to be honest, losing the manufacturing arm will help them become more flexible and agile in responding to market demand and will certainly help them to cut down on their capex requirements. There are of course advantages and disadvantages to keeping the manufacturing.

However, before ruling out spinning off their manufacturing plants completely, perhaps they should look at the Acer and ASUSTek business model. A few years ago Acer was struggling. They spun off their manufacturing into Wistron and focused on brand development. This gave Acer the ability to focus on developing a market for their own branded products and enabled Wistron to focus on manufacturing products for many other companies, not only Acer. ASUSTek has done the same thing and earlier this year spun-off their manufacturing into two companies called Pegatron and Unihan.

AMD might consider doing the same thing. I know the semiconductor industry is very different from the PC industry but there are many many examples of very successful fabless design companies. Consider Mediatek and Nvidia! AMD can succeed in this realm. I personally think to continue to compete with Intel head-on is sheer madness. AMD have to return to profitibality and I for one am interested in seeing what they will do next.

EWeek: AMD Denies Fab Sell-Off
Austin-American Statesman: New AMD chief sees clear path to recovery

Low Cost Processors: The Competion Heats Up

On Monday Nvidia launch what they are calling the "world’s first single-chip computer." From their press release:

Today, NVIDIA Corporation (Nasdaq: NVDA) introduced the Tegra family of processors, the world’s first single-chip computer capable of the rich high definition and internet experiences we’ve come to expect from our PCs, but on small pocket type devices. NVIDIA Tegra is a tiny computer-on-a-chip, smaller than a US dime (10-cent piece), designed from the ground up to enable the “visual PC experience” on a new generation of mobile computing devices while consuming the smallest amount of power.

As many commentators have mentioned, this chip is meant to take on Intel's Atom processor. Atom is a fairly new processor launched a few months ago. Both the Tegra and Atom are aimed at Mobile Internet Devices (MID) e.g. smart phones and PDAs. However, Jack Schofield notes on the Guardian some of the problems associated with the Tegra.

The obvious drawback with the Tegra approach is that it runs Windows CE (or Windows Mobile) not Windows XP, which was written for x86-compatible chips. And if you want to run real Windows software, Tegra doesn't do the job.

More than a decade ago, Microsoft wrote Windows CE as a whole new operating system precisely because it thought x86 chips cost too much for casual buyers, and consumed too much power to offer long battery life. It thought there was a market for Mobile Companions, webpads and other devices among people who didn't actually need the laptop/desktop version of Windows, or its vast library of programs.

Microsoft turned out to be wrong, at the time. It will be interesting to see if times have changed enough to make it right.

Intel's Atom takes the opposite approach of trying to reduce the overhead of the x86 code from the past (smaller, cheaper, lower power consumption). And from Computex, it looks as though the Intel Atom is the one that has pulled in the PC manufacturers.

But this might be the first step by NVIDIA to move towards competing more directly with Intel. A few month's ago at the Intel Developer Forum in Shanghai Intel said they were trying to move the graphics core into the processor. This generated an interesting response from the NVIDIA CEO. Eflux Media notes:

NVIDIA CEO and co-founder Jen-Hsun Huang went on an Intel-related rant on Thursday at a meeting with financial analysts. The context is that Intel is trying to move the graphics processing unit (GPU) from the motherboard's chipset into the CPU, merging the two processing units on a single die for increased performance.

Last week at the Intel Developer Forum in Shanghai, Intel representatives boldly stated that discrete graphics cards will eventually become "unnecessary" for the regular consumer in the future."

Claim after claim after claim. They're just false. They cross the line of fair play," Huang said. "Here's another one. nVIDIA's gonna be dead. Because we're (Intel) sticking the graphics in the CPU and (nVIDIA) will have no place to stick it," nVIDIA's CEO said.

It certainly seems battle lines are being drawn between these companies. According to Computer World:

"There's a battle emerging here," said Nathan Brookwood, an analyst at research firm Insight 64. "This is going to be a very exciting area. It's perceived to be one with huge growth over the next few years. Everyone is going to want an in if they can pull it off."

Both NVIDIA and Intel make great products. No doubt! However, NVIDIA would be wise to think twice before enaging in a war with Intel. AMD did it over the past three years and although Intel's margins suffered significantly, they were the ones left standing. AMD are now doubting their future and are looking at becoming fabless.

However, with all the current noise being made surrounding NVIDIA and Intel, spare a thought for VIA. VIA were the first ones as I recall to see the potential for low cost processors and have had them in their catalog for quite some time. It just seems people are preferring the Intel Atom processors. To better establish their competitive position VIA have recently launched their own VIA Nano processor which many observers says will also compete with the Atom as well as some of Intel's other low power processors.

This market is heating up and competition seems to be growing. I guess we will know within a year or two who the real winners and losers are. But always remember the words of the VIA CEO who said a few years ago:

The Internet will be the biggest driving force. For Internet applications, the processor is not the main requirement -- the pipe is more important than the engine. It's like the auto industry: It used to be that people build bigger and bigger engines. But the road was only so wide, and car drivers were more limited by the road than by the engine. So people started looking at efficiency of the engine and went to smaller engines.

NVIDIA Press Release: NVIDIA Tegra: Tiny Computer Packs Massive Punch!
Guardian Article: Tegra's ARM-based chip to take on Intel for mobile market
Eflux Media: nVIDIA Boss Goes on Intel Rant
Computer World: Nvidia takes swing at Intel with new Tegra chips
VIA Press Release: VIA Nano™ Processor
Interview: Wen-chi Chen: Taiwan's Answer to Andy Grove? [PDF File]

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)

AMD Targets Small and Medium Businesses

Interesting report in from the Wall Street Journal (WSJ) on AMD's realigned business strategy to target small and medium sized businesses. WSJ says:

The Sunnyvale, Calif., semiconductor company on Monday expects to unveil an initiative -- code-named Hardcastle and now renamed AMD Business Class -- that comes with a "platform" of chip technologies to help PC makers build machines tailored to the needs of smaller companies. AMD's effort is based around its Athlon and Phenom microprocessors, which come in models with two, three or four electronic brains, as well as accessory products called chip sets that AMD has offered since its 2006 purchase of ATI Technologies.

According to WSJ:

All the major PC makers "are lining up," said Hal Speed, an architect in AMD's desktop division. "We're definitely looking to take market share."

The AMD site says:

AMD Business Class technology was designed with business in mind to deliver the best value on the market. These specially engineered platforms offer the features and price points that meet the needs of today’s business computer buyers, from multinational enterprises to small businesses.

AMD Business Class technology provides exceptional business value by providing a solid, reliable foundation for systems that offer industry-leading stability and longevity, exceptional performance and energy efficiency, and essential security and manageability.

It seems they are just repackaging what they already have. Maybe they can steal some market share, but it will be hard.

WSJ Article: AMD Sets Major Pitch For Small, Midsize Firms
AMD Site: AMD Business Class: Designed with Business in Mind

Nvidia vs. Intel

After competing aggressively and successfully with AMD and VIA, Intel are now aligning their sights on Nvidia by challenging Nvidia's core strength: graphics technology.

Most observers agree that the graphics processing unit (GPU) is gaining on the central processing unit (CPU) as the single most important piece of silicon inside the PC. "When you start looking at a PC today, the (central) processor means less and less," according to Jim McGregor, an analyst at In-Stat. The GPU is simply becoming a better way for PC makers to differentiate in a landscape dominated by Intel CPUs, he said.

The question is, who is going to be the largest provider of that differentiation and what form will it take? The pressure on Nvidia--expressed by Huang on Thursday at an analyst meeting--is understandable, as the company seeks to fend off both Intel and AMD, who are increasingly focused on graphics, said McGregor. "Nvidia faces serious challenges. One of their big customers (AMD) went out and acquired a competitor (ATI) and then (you have) Intel saying we're going into your territory." That has put Nvidia on edge. Intel, not surprisingly, is the biggest threat.

Interestingly Nvidia is teaming up with VIA and jointly developing a platform based on VIA's Isaiah chipset:

...to effectively do battle with a circa-2009 Intel that excels in both central and graphics processing and AMD-ATI, Nvidia must seek new partners. It is turning to one of the only other--aside from Intel and AMD--x86 processor suppliers to build an alternative PC platform. Billed as "The World's Most Affordable Vista Premium PC," the sub-$45 processing platform will combine Via's Isaiah processor with an integrated Nvidia graphics chipset.

So, let the games begin....

(Article: Nvidia does battle with Intel, Moore's Law)