Yields in the high 90s?
Sanders said AMD's investments have also allowed the firm to run its fabs "with yields in the high 90s" percentage range.
This can't be, Elmer told us 20-30% by implication.
AMD to raise capital spending by 20% this year
Company expects to sign foundry partner soon
By Jack Robertson, EBN
(01/16/02, 08:35:29 PM EST)
ebns.com
Advanced Micro Devices on Wednesday told a financial analyst conference call that it will increase capital spending this year by 20% to $850 million. By contrast, archrival Intel Corp. Tuesday said it was cutting its 2002 capex 24% to $5.5 billion.
Some analysts pointed out that despite the Intel cutback in capex, its actual spending total is still nearly seven times higher than AMD. Also Intel's 2001 capex of $7.3 billion included some level of brick and mortar spending, while this year's capital spending, although lower, may still include nearly the same level on fab equipment.
Bob Rivet, AMD chief financial officer, said AMD R&D spending this year will increase 7.5% to $700 million from the 2001 level.
The capex and R&D investments are expected to allow AMD to start initial revenue shipments of its next generation 64-bit Hammer processor series by the end of this year. Jerry Sanders, AMD chairman, said when Hammer becomes widespread in the market in 2003, "we will break away from Intel with massive performance increases."
He expected this year AMD would keep pace with Intel's clock speed increases "and the absolute frequency difference won't widen, although our (top-of-the-line) Athlon processors will still have the (equivalent) performance level as Intel's (top-of-the-line) Pentium 4."
First silicon on the silicon-on-insulator (SOI) 0.13-micron technology Hammer chip is "expected imminently," he said. The firm has also been running some SRAM and small logic chips on the SOI process already to gain experience, he added.
Sanders said AMD's investments have also allowed the firm to run its fabs "with yields in the high 90s" percentage range.
AMD is also developing a Hammer chipset that will be available with the processor introduction, "and we are working with our (chipset) partners" to have third party chipsets on the market as well, Sanders added.
AMD President Hector Ruiz also gave the strongest sign yet that the firm will soon have a foundry to make at least one of its processors, claiming a partner will be named later this quarter.
"When you are making 40 million processor units a year, you can take the sweet spot of the line and fine tune it for foundry (production)," he said. Ruiz didn't define what "sweet spot" processor he was considering, but many industry sources believed it would be one of the value-end Duron chips.
Asked if AMD's licensing agreement with Intel restricted its use of foundries to make processors, Sanders recited language that he said had been approved by the firm's lawyers: "There is no limitation that keeps us from obtaining our objectives." He declined to elaborate.
Asked again if the firm's licensing agreement with Intel restricted foundry production to no more than 20% of all AMD processors, Sanders only repsonded, "That was part of a prior agreement."
Sanders was elated that AMD was able to increase the ASP of all processors to the $90 level in the fourth quarter, $10 higher than for the same period a year ago.
He said this was despite "extremely aggressive price cutting by Intel in the Asian market trying to protect its market share. Intel dumped inventory in Asia to the extent that we decided not to chase this market," he told analysts.
As a result the chairman said AMD lost market share in Asia where it had been very strong. "We didn't walk away from business in Asia but we chose our opportunities carefully," he added. Sanders didn't think Intel could continue its severe price cutting in Asia, and AMD this year would snap back in the region. "It depends on what Intel does."
Intel's own disclosures a day earlier showed that its sales in Asia last quarter had jumped to 35% of its total sales, surpassing for the first time the Americas portion of 33%.
Sanders tweaked Intel by citing Federal Trade Commission figures that showed AMD processor revenue gaining as a portion of Intel's own processor revenue.
"In 2000 AMD's $2.3 billion processor revenue was 8% of Intel's $27.3 billion processor revenue. In 2001 AMD's $2.4 billion processor revenue was 11.2% of Intel's $21.4 billion processor revenue. In the fourth quarter of 2001 AMD's processor revenue of $703 million was 12.1% of Intel's $5.8 billion processor revenue," he said |
