Friday, May 9, 2008

Advanced Micro Devices May Be Split Into Two Companies – Rumours

Advanced Micro Devices, the world’s second largest supplier of x86 central processing units, may divide itself into two separate companies in order to boost efficiencies of both. AMD has publicly indicated that the company needed restructuring and also admitted that it has been developing so-called “asset-smart” strategy in the last few quarters, but no actual details are clear.

According to a news-story by 247wallst.com web-site, there are rumours on the market claiming that Advanced Micro Devices may be split into two companies, one of which would concentrate on contract chip production and another would focus on development of microprocessors, graphics processing units, multimedia chips, core-logic sets and some other products. The rumour has been circulating for some time now, moreover, about half a decade ago AMD already admitted that it would make chips for its partners on a contract basis if it has enough manufacturing capacities.

Currently AMD is struggling to deliver competitive central processing units (CPUs) and also to manufacture them using latest process technologies on time. In addition, the company has to develop GPUs, chipsets and other products, which are made by contract semiconductor makers Taiwan Semiconductor Manufacturing Co. (TSMC) as well as United Microelectronics Corp. (UMC).

Theoretically, splitting the company into two would allow the independent firms to become more competitive since the contract manufacturing unit would get finances from outside AMD. However, for a maker of x86 CPUs it is crucially important to tailor state-of-the-art fabrication technologies for microprocessor design, something which may not be truly possible in case of bulk process technologies at a contract maker. Additionally, splitting the company into several units would not particularly fit into “asset-smart” strategy.

Another rumour about AMD in the recent months was ouster of chief executive and chairman of the board Hector Ruiz. However, Mr. Ruiz still remains in his office.

AMD did not comment on the news-story.

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