AMD, UMC may still build 300-mm wafer fab
By Jack Robertson
EBN
(01/17/03 09:48 a.m. EST)
United Microelectronics Corp. is still a potential partner for Advanced Micro Devices Inc. in building a 300-mm wafer fab, according to AMD chief executive Hector Ruiz.
UMC last year signed a memorandum of understanding with AMD to build a 300-mm wafer fab with AMD in Singapore, but that deal was called into question by a recent technology development agreement with IBM.
AMD is considering a range of options for selecting a partner for building a 300-mm production fab, Ruiz said.
"We have not done an official disengagement with UMC (on the Singapore 300-mm fab) because they are still a very strong technology company. We want to maintain our options."
He said within the next several months AMD might decide on a partner and location for its 300-mm production fab.
"We must be in volume production (in a 300-mm fab) in 2006, so we must start construction in 2005," he explained during a conference call with financial analysts. He said until that time, Fab 30 in Dresden, Germany, by moving to 90-nm processing, will be able to produce enough processors to meet market demand. That will give AMD the capacity to make 75 million processors a year, he said.
Earlier on Thursday, AMD reported sales of $686.4 million and a net loss of $854.7 million for the quarter ended December 29.
The net loss amounted to $2.49 per share. Excluding the effects of restructuring and other charges to show the company's results from ongoing operations, the fourth quarter net loss was $235.1 million, or 68 cents per share.
Fourth quarter sales declined by 28% from the fourth quarter of 2001 and increased by 35% from the third quarter of 2002.
For the full year ended December 29, sales declined by 31% from 2001, to $2.7 billion, with a net loss of $1.3 billion, or $3.81 per share. AMD reported sales in 2001 of $3.9 billion and a net loss of $60.6 million, or 18 cents per share.
Excluding the effects of one-time charges in 2002 and 2001, the company recorded a net loss from ongoing operations of $683.4 million, or $2.00 per share in 2002, and net income of $28.9 million or 9 cents per share in 2001.
The fourth quarter 2002 operating loss, excluding one-time charges, was $217.4 million, down approximately $100 million or 31% from the third quarter operating loss of $315.1 million. The fourth quarter 2001 operating loss was $18.1 million.
"As projected, we saw increased PC processor and Flash memory sales in the fourth quarter," said Robert J. Rivet, AMD's chief financial officer, in a statement. "We executed on our plan to align AMD PC processor inventory in the supply chain.
"We had record PC processor unit consumption (OEM billings, plus OEM net inventory change, plus net distributor resales) in the fourth quarter."
PC processor sales of $420 million for the quarter increased by 60% from the $262 million reported in the third quarter of 2002. This increase was driven by an increase in both processor units and ASPs.
With the transition of all PC processor wafer production to 130-nm technology complete, in 2003 the company will be focusing on qualifying 90nm technology. AMD said it plans to complete the qualification and start production of 90nm technology in the fourth quarter of this year.
AMD memory sales of $217 million were up 15% from the $189 million in the third quarter of 2002. Based on AMD's increased penetration in the mobile phone market, AMD Flash memory sales grew and bit shipments were a record for the third quarter in a row, it said.
The company commenced production of 130nm Flash memory in Fab 25 in Austin and JV3 in Aizu-Wakamatsu, Japan.
"Although historical seasonal patterns suggest PC Processor sales will be down 5 - 8 percentage points from the fourth quarter levels, based on a richer product mix, AMD expects first quarter AMD processor revenue will increase and in aggregate the company sales will be flat to nominally up," the company said.
"We expect to realize the first benefits of our cost reductions in the first quarter, and remain on target to reduce our overall cost structure to below $800 million per quarter by the second quarter."
During the conference call with financial analysts on Thursday, CFO Rivet projected 2003 capital investment of $650 million, down $55 million from last year's capex. He said that 2002 capital spending was also cut $45 million below earlier plans.
One saving was spelled out by President and CEO Hector Ruiz, who said as a result of the recent technology development agreement with IBM Corp., AMD will not have to build a 300-mm pilot wafer facility.
Ruiz also set the official launch date for the Opteron 64-bit Hammer processor at April. The launch of the upgraded Athlon XP Barton processor with a 333-MHz front side bus was set for February. |
