Go Big or Go Home, AMD!http://www.fool.com/investing/general/2009/06/11/go-big-or-go-home-amd.aspx Anders Bylund (TMF Zahrim)
June 11, 2009
Editor's note: At this time, the release date of AMD’s “Fusion” platform is unconfirmed. Previously, the Fool had quoted this date as the second half of 2009. The Fool regrets this error.
If I can make it there,
Thus spoke Frank Sinatra, and now Advanced Micro Devices (NYSE: AMD ) is following in Ol' Blue Eyes' footsteps. The chip designer's newly spun-off manufacturing arm is about to break ground on a new factory in New York state.
The GLOBALFOUNDRIES joint venture (Apologies to the company and their love for the Caps Lock key, but I'll be referring to it as "GlobalFoundries" from this point on) is expected to spend $4.2 billion on this new facility over the next three to four years, creating more than 1,400 direct manufacturing jobs and an additional 5,000 jobs within the region.
While that's great news for the Empire State, it also shows the benefits AMD is reaping from this spin-off move. AMD's admittedly shaky balance sheet will not need to bear the full burden of this ambitious project, as wealthy investors in Abu Dhabi help foot the bill. The company can't afford to fall too far behind Intel (Nasdaq: INTC ) in the eternal race toward more manufacturing capacity and better chip-making processes. Delaying the new fab while rebuilding AMD's balance sheet could have been a fatal error, which has been avoided for the time being.
It's also a show of strength that coincides with market research firm iSuppli showing that Intel lost 2.3 percentage points of market share to AMD last quarter. And all of these forward-looking moves are happening without the benefit of the new 6-core Istanbul architecture, which launched too recently to have