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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: milo_morai who wrote (113531)	5/31/2000 2:02:00 AM
From: Joe NYC	Read Replies (2) \| Respond to of 1574711

Should AMD start building another fab? Considering the current fab capacity for microprocessors, there is a glut. Yes, there is a shortage of microprocessors in the marketplace, but that's a very temporary phenomenon, caused by massive production breakdown at Intel. Let's consider this. There are estimates that the single AMD fab at Dresden, once in full production and at .13 micron, will be able to supply 50 million CPUs per year in 2001. 50 million will be about 33% of the marketshare (or world demand). But let's consider other capacity. AMD has another fab at Austin, Intel currently has 5 fabs producing microprocessors (someone correct me if I am wrong) with 2 more coming online (Chandler Arizona and Rio Rancho New Mexico) within next 2 years. Both of these new fabs will be 300mm, and each one will be able to produce at least twice the number of microprocessors as AMD Dresden fab. With this glut in capacity, capable of producing at least 3 times the world demand, something has to give. Either AMD and Intel start a price war and completely destroy their profits (unlikely) or, Intel, with a lot more capacity than AMD will try to change the rules, and leverage this advantage in fab capacity. How? Most likely by making the chips huge. And I mean huge, size of Itanium or Xeon Cascades with 2MB L2. These chips are around 300 mm^2, or 3 times the size of Coppermine Pentium III, cutting the production capacity to 1/3. Where will it leave AMD? If the only way AMD can sell the chips is if they have huge on chip L2, AMD will have to follow, and start making 300 mm^2 chips instead of 100 mm^2, cutting the production capacity back where it is now, about 15% of the market, far less than 30% marketshare that AMD has as it's immediate goal. Or, AMD can start building a new 300 mm megafab, that can process up to 10,000 wpw, and stay competitive with Intel. Thoughts? Joe