Lost amid the flurry of news on AMD's
exit from the chip-building business is the very real possibility that
AMD could become a fringe player in the rapidly-shrinking CPU market.
As I understand the deal, AMD's split from and minority stake (44
percent) in what was once its own semi-conductor fabrication business
leaves open the possibility that the newly formed Foundry Company,
which will maintain AMD's existing plants and build a new one in
Saratoga, N.Y., will produce chips for other chip companies. And while
no one expects Intel
to show up at Foundry's door, I wonder if, by splitting in two, it
makes it that much easier for Intel to simply devour the Foundry and
use it to build more of its own CPUs, motherboards, and "system on a
chip" (SoC) chips.
I'm having trouble understanding how, by separating fabrication
advances from chip design, AMD will suddenly become more competitive
with its chief rival, Intel. With Foundry courting other manufacturers,
AMD's design secrets will be an open book. One could argue that AMD,
unburdened by the high costs of plant maintenance, updates and
expansion, will reach new chip design and development heights. But I
don't see it that way. If AMD is no longer making anything, then all of
AMD's value will reside in the minds of a group of engineers—people who
now realize that their company won't always have full control over the
critical manufacturing process used in most new CPU designs and who are
likely already being courted by Intel.
As I've said before, AMD lost its way
years ago. It's no longer a cost leader and, and most of the results
from our system tests show that, time and time again, AMD is clearly not the performance leader.
Intel has been pressing its advantage for years. When it rolled out
the remarkable low-power, high-energy Atom CPU for netbooks, AMD had no
immediate response. This corporate restructuring may look better on the
books, but it will not help AMD compete. AMD will now find itself
working with a corporate partner that has its own agenda and catalog of
fiduciary requirements. Innovation—especially these days—may not be at
the top of Foundry's to-do list.
The free radical in all this is Abu Dhabi, which is located next to
Dubai and is the second most populace city in the United Arab Emirates.
This oil-rich emirate (one of, if not, the richest cities in the world)
has cash to burn—and burn, though I can't imagine it has any stake in
seeing Intel falter. Yes, it wants to make money to build yet more
impossibly-tall skyscrapers in its little city, but what does it really
understand about the technology and semi-conductor market?
Obviously, stock holders wouldn't let AMD burn through billions more
to build additional plants (and, no surprise, the stock is climbing on
the news), but this split marks a significant tuning point in the CPU
battleground. In fact, I'd say it's officially transformed into a
playing field where Intel owns a team, the stadium, and most of the
equipment. AMD is becoming little more than an invited spectator.
Source : http://www.extremetech.com/
