AMD's Fab Investment

It was a busy Monday for Advanced Micro Devices (NYSE: AMD  ) . While others were hosting barbeques, AMD was in Dresden, Germany to announce a $2.5 billion overhaul of its chip-making facilities over the next three years.

Dresden is a manufacturing hub for AMD. Its Fab 30 facility will receive $2 billion worth of improvements and be renamed Fab 38. Meanwhile, the relatively new Fab 36 factory will benefit from $500 million in upgrades. A separate clean room for sensitive work is also planned, which could also help expand capacity.

It's an ambitious plan, to be sure. But I can also see the logic in it, as management says it wants to improve its processor manufacturing equipment so that chips can be produced on 300-millimeter wafers. That would be a 100-millimeter improvement from current technology.

Here's why that matters. Wafers are as they sound: thin circles like rolled-out cookie dough, from which chips are punched. Larger wafers produce more chips. More chips mean more capacity to meet demand.

And there is plenty of demand, according to AMD CEO Hector Ruiz. He predicts momentum will continue to increase, pointing to his company's legal tussle with Intel (Nasdaq: INTC  ) as a catalyst for more competitive markets. That may sound overly optimistic, but it would explain why AMD recently signed up Chartered Semiconductor Manufacturing (Nasdaq: CHRT  ) to produce its chips when necessary.

Frankly, I'm not as Professor Positive sure of AMD's long-term success as Ruiz is. But he's betting a lot of money on being right. With his track record for sticking it to rivals, that has to count for something.

Treat yourself to a triple-dip of related Foolishness:

High tech. Biotech.Nanotech. Any tech. David Gardner and his Foolish band of analysts cover it all forMotley Fool Rule Breakers, and they've unearthed four multibagger picks as of this writing. Find out the names of these market-beaters by asking us for a30-day all-access passto Rule Breakers. It's free, which means all you have to lose is the prospect of richer returns.

Dell is a selection of bothMotley Fool Stock AdvisorandMotley Fool Inside Value. Get 30 days of free access to either service by clicking on the appropriate link.

Fool contributorTim Beyersstill uses a PowerPC processor in his Mac. He's just old-school that way. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out which stocks he owns by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 513880, ~/Articles/ArticleHandler.aspx, 12/22/2014 8:42:31 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement