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

To: Jim McMannis who wrote (29075)	2/27/1998 12:45:00 PM
From: Steve Porter	Read Replies (1) \| Respond to of 1573988

Jim, It doesn't. You and I have seen what IBM is like as a fab partner. And everyone thinks IBM will have great yeilds.. well as we saw with Cyrix, IBM doesn't always hav great yeilds... in fact if IBM takes just 2 months to get the yeilds up the cost to AMD would be incredibly high. Steve Cyrix/NSM Rule!

To: Jim McMannis who wrote (29075)	2/27/1998 1:22:00 PM
From: Kevin K. Spurway	Read Replies (1) \| Respond to of 1573988

Jim, good post, I think you've got it right. There are some recognizable benefits to AMD, but most of them come only if AMD is still having yield problems at Fab 25. Hopefully, whatever else might happen, the fact that AMD has its own fab will keep IBM honest as a partner. If IBM puts K6 on a third rate process, it'll find itself embarrassed when it ends up only producing low end K6's, with AMD dominating the high end. AMD owes us more info about the terms of this agreement. As an investor, I value AMD's independence, and I don't like the the idea of AMD giving away K6/K7. There's material information being withheld here that we need to know! Kevin

To: Jim McMannis who wrote (29075)	2/27/1998 1:37:00 PM
From: AK2004	Read Replies (1) \| Respond to of 1573988

Jim can I take a shot at that. 1st I do not claim any knowledge of amd yields except from supply indication which is extremely positive. 1)amd started negotiations few months back when they were just about to start conversion to .25 at fab 25. So it is reasonable to assume that IBM deal is in no way related to current yields. 2)you did not forget the copper part. IBM was planning to use it with power pcs but now the windows is open 3)your description of IBMs benefits is fairly plausible and might loose few points off the margins. But those few points were a fair pay for security of the company production with k6 and k7. its a mutually beneficial agreement for both amd and ibm and it is in no way related to current yields.

To: Jim McMannis who wrote (29075)	2/27/1998 1:45:00 PM
From: Petz	Read Replies (1) \| Respond to of 1573988

Jim, your "explanations" of the IBM fab deal don't make sense: a. AMDs yields aren't improving as much as they need and AMD is bringing on IBM as a security blanket. If this was true AMD would be bringing on IBM right now. b. AMD hasn't enough confidence in their yields so they are bringing IBM on as a security blanket. This is the closest you come to the truth. AMD has confidence in their current production of K6 (0.35), K6 (0.25, mostly notebook) and k6-3D (0.25). BUT, in 3rd quarter they will be doing wafer starts on the K6+3D, a *much larger die containing a lot of SRAM* (though not as big as the 0.35 K6). To maintain four assembly lines and two process technologies in one fab is risky. AMD has stated that all wafer starts would be 0.25 in 2H'98. IF THIS IS TRUE THEN WHO'S GOING TO MANUFACTURE THE 0.35 K6, DUMMY??? Guess who, IBM. AMD may even be selling equipment to IBM from their current K6 production line, who knows? And I would guess that IBM will also be preparing to manufacture the K7 using their copper technology. c. AMD anticipates demand they can't meet (due to low yields) so they are bringing on IBM... Same as "a" d. AMD wants to keep IBM as a customer so it's letting them have chips for the cost of manufacturing IBM already had the right to package the AMD wafers, use its name on the chips, and it had a sweetheart pricing deal. Chances are, that agreement expires 7/98. So, one aspect of the new agreement is that it is replacing the existing one. The fact that IBM will be making the wafers as well shows that IBM not only thinks the K6 is "package-able", but that the K6 is now "manufactureable" e. yeah right f. AMD wants to get in on IBMs copper technology and maybe learn of IBMs superior process technology. I agree, this is probably part of the deal, especially for the K7. One further reason for the deal you do not mention is that it makes it easier for AMD to get new customers, such as Dell, Gateway. Petz

To: Jim McMannis who wrote (29075)	2/27/1998 7:41:00 PM
From: Profits	Read Replies (2) \| Respond to of 1573988

Jim, Do you think the folks at AMD just fell off the turnip truck. They aren't going to give chips to IBM. It's a pure foundry arrangement. Now why would AMD try and keep IBM as a customer at the expense of company profits? TSMC, UMC, IBM all have foundries. Does that mean that everything they build in those foundries they get for free? Absolutely not. AMD has been in talks with IBM for several months on their Copper technology. AMD will pay royalties on that technology. Your assumption that AMD is giving up something to sign IBM as a foundry is ridiculous. Profits