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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Monica Detwiler who wrote (69896)	2/1/2002 5:28:11 AM
From: Joe NYC	Read Replies (1) \| Respond to of 275872

Paul, I think you are missing the fact that there are 2 phases to this deal (if I understand it correctly). First phase is a foundry deal, when UMC will make chips, UMC will use their own fab, equipment, workforce, process technology. It starts soon The second phase is the construction of a jointly owned fab, which will not happen for 3 years. There is absolutely no indication in the press release that AMD will cease their own process development. You must have misunderstood that part, or made it up. Joe

To: Monica Detwiler who wrote (69896)	2/3/2002 7:58:20 AM
From: dale_laroy	Respond to of 275872

Monica: Your quote implies only that AMD's researchers will have access to UMC's facilities, not that UMC will do any research for AMD. What these deals would seem to be all about is: 1) Maximizing the potential of UMC better utilizing their existing fabs. This of course will only happen if demand exceeds AMD's capacity. In other words, UMC will probably not benefit from the outsourcing deal unless and until AMD starts selling more than 50 million processors per year (more than 67 million per year once the shrink to 90nm takes place and Hammer replaces Athlon). 2) Minimizing the cost of the research needed to migrate to EUV. AMD will continue researching the potential of migrating to the 65nm node using the existing Fab30 facility, while sharing the cost of the research necessary to develop an EUV fab. 3) Minimizing the cost of replacing the capacity of Fab30 when the migration to EUV is made. It is possible that AMD will succeed in getting Fab30 to 65nm without the use of EUV, and the JV fab will come online without EUV. However, even if this is the case, the JV fab will have to be EUV ready for the migration to EUV at the 50nm node. Fab30 will probably have to be retired from x86 production, perhaps going into embedded MIPS processor production, when x86 production moves past the 90nm node. Even if Fab30 makes it to 65nm however, it will never make it to 50nm. In any case, building a single 10,000 wafer fab is less expensive than building two 5,000 wafer fabs, so the JV fab will minimize the cost of replacing Fab30's capacity.