AMD pours money into 300mm wafer production

[Tarinder]

AMD pours $2.5bn into its Fab 30 in Dresden, Germany, to produce 300mm wafers.

It needs to, as Intel has 300mm production down to a tee. AMD's investing heavily in its future, but is it too heavy?

What do you think?

[8bit]

If a company like Dell come along and say they want to buy your product in volume, do you say "hmm, sorry I don't think we can produce that much" or do you make damn sure you can?

That said though, I wouldn't be surprised if there was a psychological edge to an announcement like this. If I were an Intel exec (even with Conroe on the way) and I read this news, I'd be thinking "these boys aren't messing about here, that's a big spend so they must be sure of worthwhile returns"...

[DR]

I don't think thats the reason at all - AMD have had to do this for years. They won't make money in the margins which Dell work to but it does mean they can ramp volume.

Currently AMD don't do all of their production; some of it is outsourced.

This is big boy money to spend - you don't do this just for a deal with Dell - you do this because you have to.

[UltraMagnus]

well, this can only be a good thing, means cheaper processors eventually!

[Veles]

well, this can only be a good thing, means cheaper processors eventually!

Once they've got that $2.5bn back

[8bit]

I don't think thats the reason at all - AMD have had to do this for years. They won't make money in the margins which Dell work to but it does mean they can ramp volume.

Currently AMD don't do all of their production; some of it is outsourced.

This is big boy money to spend - you don't do this just for a deal with Dell - you do this because you have to.

I didn't really mean in terms of fiscal returns (from the Dell contract), more that being such a significant win they're not going to want to upset Dell by not being able to produce. I imagine the Dell Opteron offerings are going to be in high demand and similarly Dell are going to want to expand on the range of Opteron machines as well. It seemed logical to me (based on my assumptions) that the Dell thing might be at least one factor in AMD's fab capacity expansion.

But you're right enough, if AMD are spending this sort of cash they must be damn sure of ROI, how much of it is from Dell will only be a part of that. Outsourcing anything is only really worth the savings up to a point; beyond that point it becomes more cost-effective to bring whatever it is in-house.