AMD investing $2.5bn in German chip factory (FT)

Advanced Micro Devices said on Monday it was investing $2.5bn in a German chip factory in a move to expand its capacity and grab more market share from its rival Intel.

AMD, the number two maker of PC microprocessors, said it would implement three new projects at its existing Dresden facility over the next three years.

This would give it additional production capabilities to produce circular wafers that are 12 inches or 300mm in diameter. The larger diameter wafer yields more than twice as many processor chips and greater efficiencies than its 200mm predecessor.

Hector Ruiz, chief executive, said: “As global demand continues to rise for AMD products, we are scaling our manufacturing capacity intelligently to meet our customers’ growing needs.

“To achieve this, we are pursuing an aggressive path to invest in and expand our top-rated manufacturing capabilities in Dresden.”

AMD has set itself a target of winning 30 per cent of the market for the dominant “x86” family of microprocessors over the next few years. Traditionally, Intel has held around 80 per cent of this market but its lead has been slipping as it has suffered chipset shortages and AMD’s chips have offered better performance.

Analysts have said that one of the reasons Dell, the biggest PC customer for chips, has not bought from AMD to date is concern over its manufacturing capacity and ability to deliver.
However, Dell announced earlier this month it would use AMD chips for the first time, in a small server segment of the market. AMD may feel its announcement of new capacity could broaden the relationship.

AMD has lagged Intel in converting to 300mm wafers and in moving from 90 nanometres or billionths of a metre to 65 nanometre processes.

The measurement refers to the reducing width of circuitry on chips, allowing more transistors to be fitted on the die.

The Silicon Valley-based company did not say how it would fund the Dresden expansion.