AMD goes Fabless

Well, it's official. AMD is spinning this pretty hard, but they are selling all of their Fabs and will no longer be manufacturing their own CPUs. AMD sold off all of their Fabs worldwide in a deal with ATIC -- Advanced Technology Investment Corporation. ~3000 AMD employees will transition to the new company/joint venture which will be named Foundry.

The Inquirer is already dubbing the joint venture Arabian Micro Devices, and I can't say that I disagree. I'm concerned that this is funded ultimately through ATIC by the Emirate of Abu Dhabi itself. Yes, AMD will retain 45% share in stock, but if things turn sour the already troubled chipmaker is now at the mercy of the new managers of its former Fabs as well.

Obviously a lot of chipmakers operate in a fabless manner. I've had some experience with Silicon Labs-- a company that has never owned or operated a Fab, but still does OK for itself. Certainly the advantage is that you don't have to specialize in desiging, building and operating the Fab itself in a manner that recoups your huge facility investments in the most efficient manner possible. That frees you up to concentrate on design and be more agile... but it also prevents you from having any direct control of Fab outputs. Not getting enough ICs? Bad yields? They can't just shuffle production around by fiat to get the outputs they need.

If this were such a positive deal, why wouldn't AMD have gone for this 5 years ago, when Fabless started to become the new awesome thing? They were already having problems with their own fabrication processes. Chartered Semiconductor is already doing Fabrication for them as a partner, and ATI produces their chips through TSMC. This is a clear sign of desperation to be doing it now, and they're lucky to have found a suitor willing to take on ~$1.3 billion in debt along with a $700 million set of fabrication assets.

I've got to admit, I'm a little nostalgic at the news. I lived a few blocks from the K5 Fab (Fab 25) as it was spinning up in the mid 90's. I sat at the bus stop many a day and watched AMD hotshots drive past in their Lotus Esprits. Those days are not to return.