Sat, Oct 15, 2005 - Page 10 News List

AMD to boost production at new plant in Germany

FLIGHTING INTELThe chip giant hopes to snatch away market share from its rival Intel by making more of its computer processors at a new US$2.5 billion plant

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Advanced Micro Devices (AMD) Inc, the global No. 2 maker of personal-computer processors, aims to win market share from Intel Corp by increasing production capacity with a new US$2.5 billion plant in Dresden, Germany.

AMD plans to attain a market share of about 30 percent in the next three years, based on the number of chips sold, Chief Executive Hector Ruiz told reporters yesterday at a press conference in Dresden.

"And after we have reached 30 percent, we will aim for even more," he said.

The company currently has a market share of about 20 percent, he said. Sunnyvale, California-based AMD aims to invest US$2.5 billion through 2007 in the new plant in Dresden, which will employ about 1,000 people and will double the company's production capacity in the next three years. The company received more than US$500 million from the Federal State of Saxony and the German Federal Government, Ruiz said.

AMD already has a plant and a design center in Dresden. The new plant will be able to make chips that are smaller and more powerful, the company said in a statement today.

AMD is a "good example for a company facing a mighty competitor that has 80 percent of the market and aims to keep its competitors small," said German chancellor Gerhard Schroeder as he officially opened the plant together with Ruiz yesterday. "Innovative products and new production techniques are necessary for economic success."

The key to AMD's ability to compete with its richer rival comes from the flexibility it has built into its production lines, said Thomas Sonderman, director of manufacturing technology at AMD in an interview on Oct. 4. The company's current plant in Dresden is able to switch between different products part way through the manufacturing process.

Other semiconductor companies use separate lines or different product plants to make chips that work at different speeds or designed for different types of computers, Sonderman said.

AMD budgeted about US$1.5 billion for new plants and equipment this year, compared with a US$5.8 billion plan at Intel.

"We can't outspend Intel, we can't get a better deal from equipment makers," said Sonderman. "We've had to spend our dollars wisely."

Chipmakers typically introduce new manufacturing processes every two years to shrink the size of circuits, cramming more functions onto smaller areas of silicon and making chips more powerful.

AMD's new plant in Dresden will be able to make chips with 65 nanometer circuits. A nanometer is one-billionth of a meter. A human hair is about 100 microns, or millionths of a meter.

Ruiz said he doesn't expect the new plant in Dresden to lead to oversupply and price pressure in the semiconductor industry.

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