Advanced Micro Devices, the world’s second largest designer of x86 central processing units, is reportedly in talks with state-owned Rusnano company over a semiconductor manufacturing joint-venture in the Russian Federation. The details of the project are somewhat shady to say at least since the amount of investments that Rusnano is ready to provide is by far lower than the cost of a leading-edge chip fab.

A top manager of one of three semiconductor manufacturers in Russia said in an interview with RBCdaily news-paper that Rusnano was ready to invest up to $500 million into a joint-venture with AMD. The chip making facility is projected to make microprocessors for smartphones using 65nm manufacturing process. A source with knowledge of the matter has confirmed the media that Rusnano was negotiating with AMD, but did not provide a single detail. It is not clear when the potential fab may become operational.

“There are various options [for establishing a semiconductor joint-venture]. Chip manufacturing can be established in Russia, abroad or set up abroad, and then transferred to Russia. In any case, at present there are no production capacities [for making chips using 65nm process technology in the country],” a source with knowledge of the matter is reported to have said.

Alexander Belenkiy, the head of AMD Russia, has confirmed that the chief executive officer of Rusnano, Anatoly Chubais, has met with executives from Advanced Micro Devices, but made no comments about possible chip making joint-venture.

It is noteworthy that AMD has been withdrawing from low-cost chips aimed at smartphones or PCs for emerging markets for several years now. Moreover, the company decided to spin-off its manufacturing operations into a separate company called Globalfoundries, a joint-venture between AMD and Advanced Technology Investment Company of Abu Dhabi, last year. The cost a leading-edge semiconductor manufacturing facility may be several billions of dollars, the sum that AMD may not be able to provide.

At present Zelenograd, Russia-based makers of semiconductors – Angstrem, Micron and Sitronics – concentrate on making rather simplistic logic chips, various SIM cards, RFID chips and so on. There is no market for smartphone chips in Russia simply because there is no cell phone manufacturing in the country.

In order to make money operating semiconductor fab that makes chips at 65nm node, the factory should be heavily utilized, at 100% in the best case scenario. Considering the lack of chip market in Russia, such utilization rate may be unachievable.

The Russian Corp. of Nanotechnologies (Rusnano) was established in 2007 with the aim to form nanotechnology infrastructure, which includes the nanotechnology centers of excellence, business incubators and early stage investment fund in Russia. Rusnano provides scientific and educational programs that are required for its investment projects to succeed, and also supports the popularization of various semiconductors.

Tags: AMD, Rusnano, Globalfoundries, 65nm, Semiconductor, Business, Angstrem, Micron, Sitronics