Tue, May 30, 2006 - Page 11 News List

AMD to spend US$2.5bn boosting chip production

CHIPPING AWAY Advanced Micro Devices is taking the fight to Intel by expanding output at its facilities in Dresden, taking that investment to about US$8.1billion

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Advanced Micro Devices Inc (AMD), Intel Corp's only competitor in personal computer microprocessors, will spend US$2.5 billion to increase output from its two German plants.

The money will be used to refit an older plant with more efficient equipment and expand output at a facility it opened this year, the company said in a statement yesterday.

AMD chief executive officer Hector Ruiz has taken sales from Intel and pushed his market share to more than 20 percent for the first time in more than four years. The Sunnyvale, California-based company is upgrading production to take on Intel's industry-leading fleet of plants and ensure it can supply enough chips to meet higher demand for AMD chips.

"We expect that AMD's momentum and demand for our products will continue to increase," Ruiz said in the statement.

AMD picked the eastern German city of Dresden for its investments because "it's much easier to find the well-skilled people we need, as the region has been a center for the chip industry for a long time," Hans Deppe, head of the company's operations in Dresden, said at a press conference yesterday.

AMD's Fab 30 plant in Dresden will be refitted to use the latest 300mm production equipment and renamed Fab 38. Fab 36, at the same site, will have its 300mm capacity increased. The two factories will share a new test facility that is being built to free up space for production.

Fab 30 now uses 200 millimeter production. The factory's equipment builds the various layers of metal and other material used in the making of chips on 200mm discs of silicon.

By switching to 300mm discs the plant will be able to make twice as many chips per disc, thereby increasing output. Intel has five 300mm plants in full production.

The site expansion will take AMD's total investment in Dresden to about US$8.1 billion, the company said. In October 2005, the company already said it will spend US$2.5 billion on a new plant in the eastern German city. By the end of last year, the chipmaker had invested about US$4 billion in its Dresden operations.

Global semiconductor sales will rise more than expected this year and next year because of better-than-forecast demand for memory chips that go into computers and consumer electronics, researcher Gartner Inc said in a report released on May 19.

Industry sales will gain 11 percent to US$259.5 billion this year and rise 8.9 percent to US$282.6 billion next year, said Andrew Norwood, a chip analyst at Stamford, Connecticut-based Gartner.

AMD's new spending will increase the Dresden site's capacity to 45,000 silicon wafers, or discs, a month by the end of 2008, the company said in the statement.

The refitted AMD plant will use 65 nanometer technology to make chips. Intel has three plants in 65-nanometer production and will upgrade a fourth by the end of the year. A nanometer is a billionth of a meter. Chips made with 65 nanometer line widths have transistors that have dimensions smaller than a virus.

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