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2009: Globalfoundries: Real Men No Longer Have Fabs

Jerry Sanders, the founder of Advanced Micro Devices, once said that the real men - those, who can actually compete on the market of x86 microprocessors - should have fabs. Unfortunately, a series of mistakes and economic downturn left AMD without own manufacturing capacities.

Hector Ruiz did a lot of good things for AMD. Moreover, he understood very well that two of the major reasons why Intel is so considerably ahead of AMD is because the company can produce huge amounts of microprocessors thanks to massive production capacities and leadership in manufacturing technologies.

Hector Ruiz negotiated with authorities in Germany and New York about expansion of manufacturing capacities and constructing a new fab. According to estimations in the mid-2000s, by 2010 the Sunnyvale, California-based chipmaker would have three foundries producing chips on 300mm wafers with total output up to 67 500 wafers per month, which meant that AMD would have increased its capacities by over five times from 2005 to 2010. Unfortunately, the plans were never fulfilled.

Chief executive officer of AMD decided to somewhat slowdown transition to 65nm process technology since sales of 90nm chips were very high back in 2005 thanks to performance advantages over Intel processors. However, three-year-long life-cycle of 90nm technology left AMD completely uncompetitive against Intel in 2007. Moreover, design issues with the famous "Barcelona" product with K10 micro-architecture left AMD without the premium CPU sales in 2008. Fortunately for AMD, Dirk Meyer was very instrumental to fix the situation with both 45nm and K10.5 micro-architecture so AMD could fight back some positions when it launched Phenom II chips in early 2009.

But poor sales and losses throughout 2007, 2008 as well as 2009 because of uncompetitive products and economic crisis forced AMD to make a deal with Advanced Technology Investment (owned by Mubadala of Abu Dhabi), spin off its manufacturing facilities and form Globalfoundries, a contract maker of semiconductors.

While initially AMD had massive influence of Globalfoundries and its 45nm manufacturing technology was developed under its own supervision and was tailored for its microprocessors, eventually the company sold the majority of its GF stock to ATIC and lost leadership in the board of GF's directors. Without hands-on control at Globalfoundries, AMD ran into massive problems with 32nm fabrication process. Instead of shipping its highly-anticipated Bulldozer products in 2010, the company had to delay them by about a year and only initiated shipments in late September, 2011. To make the matters worse, AMD fired its chief exec in early 2011 and for nine months there was no executive to tackle the problem and its possible consequences. Going forward, AMD will likely solve its problems with fabrication processes, yields, etc. But it will no longer be AMD from 2000 - 2006 with performance crown on its head and with limitless prospects down the road.

But while real men from AMD no longer have fabs, the industry got a new large contract maker of semiconductors that is able to compete against Taiwan Semiconductor Manufacturing Company both in terms of process technologies and volumes thanks to strong financial backing from ATIC and Mubadala.

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