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AMD Invests $2.5B in Dresden Fab
By Suzanne Deffree -- Electronic News, 5/30/2006
AMD has announced plans to expand its Dresden site through a $2.5 billion investment, adding a 300mm fab and significant capacity.
To cut down on building time, AMD’s newest fabrication facility will come online through a transformation of the company’s existing 200mm Fab 30, which will be named Fab 38. In addition, AMD said it will also expand Fab 36’s existing 300mm capacity and build a new clean room facility to handle the site’s growing bump and test requirements.
AMD said it will ramp down 200mm manufacturing in the second half of 2007, with preparation already under way for the ramp of 300mm wafers on 65nm process technology at Fab 38 by the end of 2007.
The transition from 200mm to 300mm at the German facility will allow for twice as many processors on a wafer, and, AMD said, the projects have the potential to increase Dresden-based manufacturing to a full capacity of 45,000 300mm wafer starts per month by the end of 2008.
The timing of this announcement is noteworthy, as the chipmaker just announced on May 18 that it had gained a deal with Dell for use of its Opteron processors at the high-end of its server line. Since then, speculation has risen that AMD would not have the capacity to fill Dell orders, in addition to already existing customer orders, nor would it have capacity to chase down further OEM customers.
“In terms of what this means for AMD, we generally view Monday's announcement as an incremental positive given some concerns, currently, that AMD would not be able to meet the mounting demand associated with its traction in the server market,” said Tim Luke, a managing director at the Lehman Brothers, in a research note this morning. “As AMD continues to gain traction in penetrating key OEMs where it has previously not had a relationship, the real opportunity, in our view, rests with the ability of the company to leverage in desktop and notebook products. Thus, if capacity became an issue over the next couple of quarters, AMD would miss an opportunity to expand top line growth, which we believe is not currently expected on the Street. We continue to remain constructive on AMD's ability to further penetrate key OEMs, with Dell being the most recent evidence of AMD's progression into key customers and Toshiba likely in the near-term.”
The majority of AMD’s $2.5 billion investment will go into new equipment in the Fab 38 facility, the company said, not breaking out specific financial details. Money will also be used to build the new clean room facility on its Dresden campus for bump and test requirements, which will support both fabrication facilities. Previously the clean room facilities were located within Fab 30 and Fab 36. By moving them into a new facility in 2007, AMD said it has the ability to maximize production space at both Fab 36 and Fab 38, providing increased output and capacity.
“With the addition of Fab 36, AMD took a major step forward in increasing output and scale for its global manufacturing and with this announcement we raise the bar even further,” said Daryl Ostrander, senior VP of logic technology and manufacturing in AMD’s microprocessor solutions sector, in the company’s statement. “As we look ahead to aggressive process technology transitions to 45nm and beyond, the ability to continue delivering these technologies with world-class yields will provide customers with incredibly sophisticated and agile manufacturing capabilities, whereby we can continue to accommodate the increasing demand for AMD products.”
