I agree with the above, spinning off is bad - the ...

2008-04-30T19:22:00.000-07:00

I agree with the above, spinning off is bad - the foundry keeps the rest of the enterprise grounded (engineers working on the product side can live the manufacturing side) - creates a synergy of experience that enables both to continue.

I've worked in the auto industry for a solid amount of time (Discretionary Thoughts)- and the strongest designs and engineering that are done are usually by people that were stationed in or close to the manufacturing facility - where the action occurs. Weaker organizations that don't place their product design headquarters or R&D groups near a plant (or have outsourced the plant!) over time become weaker as the cross-pollination never happens as new people are hired into the business. That plant stuff becomes mythical and abstract and drifts away into legend. Meanwhile the competitor with these functions well integrated is stomping on the pedal.

The larger strategic issue for AMD is how does it maintain its focus as a cpu and gpu company? Seemingly separate parts... The direction things are heading, with graphics so important, is the question of do you continue designing a motherboard with an add-on graphics card, or a "graphics-board" with an add-on cpu card? Or the combined gpu/cpu is possible by AMD where it will be slow by Intel and Nvidia because of the separation (and need by Intel to remain CPU focused).

I think once AMD finishes harmonizing and integrating their very large merger - they will be back on track and Intel will be in trouble. It wasn't very many years ago that HP and Compaq merged, with chaos and market share drops that competitors like Dell took advantage of. Now the new HP is regaining momentum.

J

Interesting proposal on splitting the company up.....

2008-03-14T19:28:00.000-07:00

Interesting proposal on splitting the company up... but I think you underestimate the foundry impact.

1) AMD has very little actual capacity when compared to foundries like TSMC, UMC... this would put the spin-off at a serious disadvantage. F36 simply is not that big and it is not clear to me how the spinoff could survive, unless it was merged with more foundry capacity.

2) The interaction between process and design: Processes are often tweaked to match a design and vice-versa. As a separate company AMD would have a much more significantly difficult time tweaking a process that a spinoff owns, and would have no control over the timeline that the foundry spinoff changes technology nodes (which could put them at a disadvantage with Intel).

3) The longer term financial impact to AMD - using a foundry adds another level of cost that further eats into margins. While I've heard some mistakenly suggest that since ATI has shown this can be successfully done and the CPU division can 'learn' and leverage this expertise, this is a completely different case as Nvidia also uses a foundry.

"Its funny how things seem to make sense when you’re involved in a business for more half your life."

This is a bit overly simplistic - it makes sense to you as an end user, and to anyone else trying to develop PC's etc... but I don't see this making business sense for AMD. They would get very little value on the dollar for the assets they are spinning off into the foundry company. I would think there's even a question of whether the process IP could be spunoff as that is acquire/licensed through IBM, and if this was not included in the foundry spinoff, then the foundry really becomes just a collection of factory shells and equipment. Also in the long term, the lack of inhouse manufacturing capacity may put AMD at a competitive disadvantage with Intel (for 2 of the 3 reasons I list above).

So while making sense to users downstream of AMD, I don't see how this makes sense overall.

Comments on rahulsood: First it was four, then it was three… could it be ...

I agree with the above, spinning off is bad - the ...

Interesting proposal on splitting the company up.....