First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.
Analysts: Spin-off puts AMD back in the fight with Intel
- — 08 October, 2008 11:22
By splitting off its manufacturing operations into a separate company, Advanced Micro Devices could be on track to become the nimble, innovative company that once had Intel on the run.
AMD Tuesday announced plans to spin off its manufacturing operations into a separate company. With this dramatic turn, struggling AMD not only rids itself of the financial burden of running fabrication plants, it gains a hefty influx of cash from its partner in the deal, Advanced Technology Investment Co. (ATIC).
"I don't think this will give us a whole new AMD, but the industry will be dealing with an AMD that's a good deal more nimble because they won't be dealing with the same financial burdens or dealing with the fab plants," said Dean McCarron, president of Mercury Research in Cave Creek, Ariz. "Because this lowers the break-even point for AMD, it gives them staying power in the market and will help them focus on design and sales again."
Early in the decade, AMD had grabbed a solid footing in the semiconductor market. Its success was a key reason for Intel's stumbles between 2003 and 2005. But come 2006, Intel responded with a reorganization that curbed AMD's momentum. After that, AMD stumbled under the financial burden of acquiring ATI Technologies Inc. and the delay of its Barcelona chip.
Both McCarron and Dan Olds, principal analyst at the Gabriel Consulting Group, said simply getting a big chunk of debt off its back could help the chipmaker regain some of the fire that once had it nipping at rival Intel's heels.
"It's like the old AMD after a spa and rehab vacation," said Olds. "They've come back stronger financially and in better shape overall. They're still the same company and they still [partially] own their fab operations. It's like they got a rich uncle to help them out."
Word of the spinoff was welcome news to Wall Street, which responded by lifting AMD's stock by 18% this morning - at the same time that the Dow had dropped by 200 points, noted John Lau, a senior semiconductor analyst and managing director at Jefferies & Co., who predicted the spinoff early last month.
Lau said the spinout of the fab operation is a necessary move for AMD. "This fab spinout changes the equation on how to remain competitive," he said. "Now it's a design race."