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Advanced Micro Devices disclosed more details about its new Fab 36 during the conference-call today.

As reported in the morning, the new factory will cost about $2.4 billion in total. AMD got $1.5 billion as help, which is $500 million as subsidies, grants, etc, $700 million is a loan and remaining $300 as an equity from 2 partners - Saxony and some European investors. The rest $900 million are expected to come from AMD itself, but the firm did not elaborate whether this would be cash or other options.

The Fab 36, as expected, will manufacture chips in 300mm wafers using 65nm technology process. This will allow AMD to cost-effectively make its MPUs and this seems to be the company’s primary goal for the new foundry. Even though there is 20% to 30% gap between the costs of manufacturing using 200mm wafers and 300mm wafers as well as shrink of fabrication technology to 65nm process also provides some cost benefits, CPUs also get more and more complex, as a result, there are no breakthroughs in margins or costs expected by the company’s management.

AMD reckoned during the conference-call that it will be in a very favorable position next year after the transition to 90nm, as the sizes of its chips will be smaller compared to that of the competitor.

AMD projects the building to be completed in late 2004, 12 months from now. The company will begin the installation of equipment “just before the end of the 2004” and plans to start qualifications of the fab in the late 1H 2005. Earlier it was said that the Fab 36 will become operational in 2006. It usually takes 18 to 24 months to fully deploy a semiconductor foundry at 100% capacity. The new facility will employ roughly 1000 people.

The initial capacity of the fab is 13 000 300mm wafers per month, but the building itself allows AMD to expand the foundry to produce up to 20 000 wafers per month. The company has an option to manufacture chips for other firms to utilize the capacities, it was noted.

The 300mm equipment for 65nm chips installed in IBM’s East Fishkill, New York, foundry and to be set up in AMD’s Fab 36 in Dresden, Saxony, will be “pretty much identical”. Since IBM and AMD co-develop 65nm process together, there will be an option for AMD to make chips for IBM’s clients, such as NVIDIA Corporation, to fully engage its manufacturing capacities.

AMD “has discussion underway with several potential partners in one form or another”. Co-manufacturing with IBM “will be a natural thing to consider,” said Hector Ruiz, the CEO of Advanced Micro Devices.

The management of AMD also disclosed some information on the Fab 30 that currently manufactures 100% AMD CPUs. The company expects the Fab to start making the 90nm chips sometime in the third quarter of 2004. The firm originally expected to start commercial fabrication of 90nm parts in the second quarter, but is 2 to 3 month behind it schedule.

Currently the Fab 30 and the Dresden Design Center employ about 2000 qualified professionals – that was one of the factors that influenced on AMD’s decision to establish the Fab 36 next to the Fab 30 in Dresden, Germany. The future of the Fab 30 itself remains to be seen. A reasonable option would be an upgrade, an analyst mentioned during the conference-call, but there is no final decision at this point, the management replied.

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