AMD still mulling plans for a joint-venture chip plant

Advanced Micro Devices Inc. (AMD) may yet team up with another chip maker for the construction of a semiconductor fabrication plant (fab) to expand its manufacturing capacity for microprocessors, despite shelving similar plans in 2003, according to a senior company executive.

AMD’s plans to establish a joint-venture fab were hinted at in a recent filing with the U.S. Securities and Exchange Commission (SEC), which detailed an agreement with IBM Corp. to extend collaboration between the two companies for the development of advanced chip-making technology.

The 8-K filing, also called a current report, notes that under the terms of the agreement AMD has the right to use the chip-making technology developed in cooperation with IBM at a manufacturing facility jointly owned by AMD and a third-party contract chip maker.

“That’s an important part of the 8-K,” said Henri Richard, AMD’s executive vice president of worldwide sales and marketing, speaking with reporters Thursday in Beijing.

AMD currently operates one fab, Fab 30 in Dresden, Germany, that produces microprocessors using 200 millimeter wafers. The company is building another fab in Dresden, called Fab 36, which will produce microprocessors using 300mm wafers. Fab 36 is expected to begin production in 2006, Richard said.

This increase in production capacity comes as AMD sees growing demand for its 64-bit Opteron and Athlon 64 processors and prepares for a push to take market share from its principal rival, Intel Corp., over the next few years, Richard said. “AMD is on a roll in terms of the market adoption of our technology,” he said.

If AMD’s plans to expand its market share are successful, the company will need to add additional production capacity in the coming years.

“We’re planning for an even greater success so we need provisional plans to be able to fulfill more demand than even the Fab 36 would allow us to fulfill,” Richard said, adding that AMD is not in a position to disclose specific plans for a joint-venture plant.

“We’ve got to get that factory (Fab 36) running and at full capacity before we make the next plan,” Richard said.

This is not the first time that AMD has considered plans to build a fab in cooperation with another chip maker. An agreement to build a fab in Singapore with Taiwanese contract chip maker United Microelectronics Corp. (UMC) was cancelled after AMD signed an agreement with IBM in December 2002 to jointly develop chip-making technology, according to AMD spokesman Tim Martin.

While those plans never came to fruition, relations between AMD and UMC remain strong, Richard said. “There’s no bad blood there,” he said.