Advanced Micro Devices (AMD) is optimistic enough about its future that the company is planning to break ground on a major new processor manufacturing facility by the end of 2003, company executives revealed Thursday at an analyst conference held at AMD's headquarters.
"I think that now we've got sure signs that things are coming back," said Henri Richard, AMD's senior vice president of worldwide sales and marketing. Judging from feedback from Fortune 500 companies and large OEMs (original equipment manufactures), companies may now be thinking about upgrading PCs, spurred in part by aging equipment purchased in anticipation of Year 2000, said Richard.
"This could even offer an opportunity of a mini-bubble in the first part of 2004, due to pent-up demand of 2003," he said. Whether or not this "mini-bubble" of IT spending will emerge, however, depends on sales during the 2003 holiday season, said Richard. "A lot of the enterprises are looking at the retail market as an indication of how bullish next year will get," he said.
AMD itself appears to be mildly optimistic about the year ahead. After a disastrous 2002, the company recently reported a 91 percent increase in microprocessor and chipset sales and an 88 percent increase in overall revenue.
AMD is now planning a "modest" amount of new hires in sales and marketing, and engineering, according to Hector Ruiz, AMD's chief executive officer. The company is also looking to expand into emerging markets like China, India, and Indonesia, AMD executives said.
Ruiz also confirmed that AMD had selected a site and planned to break ground on a new manufacturing facility. The new plant will support the 300-millimeter wafers that AMD plans to use as the basis for its 65 nanometer (nm) process and 45nm process chips.
The facility is a necessary consequence of AMD's move to smaller components, said Kevin Krewell, the general manager of industry analyst firm MicroDesign Resources. While AMD already has a facility in Dresden, Germany, this plant could not be used to make processors with the 65nm and 45nm processes without a major retooling, and that would mean a halt to AMD processor production, Krewell said.
There are three logical places to build the new plant, Krewell said. Dresden or Austin, Texas, would make sense, because AMD has already established manufacturing facilities in both cities, and a location in New York State might also be an option, because that is where AMD is working with IBM Corp. on the co-development of its 65nm and 45nm processes.
Ruiz declined to give any details on the site of the new plant, but he did comment on one of the biggest unanswered questions for AMD: how the company will be affected by Microsoft's recent slip in the release date for a 64-bit Windows. Originally expected by the end of 2003, production versions of Windows Server 2003 for Opteron and Windows XP for the Athlon64 are now expected in the third quarter of 2004.
In an interview after the analyst presentation, Ruiz downplayed the significance of the delay, saying that even before Microsoft announced the slip, most customers are were not really considering 64-bit applications for Windows before the second or third quarter of 2004. "I think the impact will be minimal," he said.
AMD plans to refresh its entire product line during 2004, said Dirk Meyer, the senior vice president of AMD's Computation Products group. "You're not going to see any big product launches from AMD in 2004, rather, you're going to see the fruits of the harvest we planted earlier," he said, referring to AMD's 64-bit Opteron and Athlon 64 processors.
During 2004, AMD will produce the last of its chips using a 130nm process, with a desktop Athlon 64 processor codenamed Newcastle as well as a laptop Athlon 64, expected in the first half of the year. These will be followed by a desktop Athlon XP chip called Paris, and an Athlon XP-M chip called Dublin, in the second half of the year.
The 64-bit chips will be available in a wide variety of price points by the end of 2004. Also in the second half of the year, AMD plans to introduce three new Opteron processors based on the 90nm process: an 800 series processor called Athens, a 200 series chip called Troy, and the 100 series Venus.
AMD will also ship two new Athlon 64 processors in the second half of the year, based on the 90nm process. They are codenamed San Diego and Winchester.
Three new 90nm Opterons are on the road map for the second half of 2005 codenamed Egypt, Italy and Denmark. The company also plans to release an Athlon 64 chip code named Toledo, an Athlon XP processor named Palermo, and an Athlon XP-M processor named Trinidad in the same period.