AMD To Split In Two?

As reported on Monday by the news site tgdaily, the word is that Advanced Micro Devices (AMD)  might be split into two entities — Asset Light and Asset Smart. One entity will be led by the new CEO Dirk Meyer, who will succeed Hector Ruiz as AMD’s chief executive, and the other one will focus on the development of chip technologies and a manufacturing arm that will take over AMD’s fabs. AMD currently has fabs in Dresden, Germany, and is planning another in Malta, NY.

At this time, there is no official confirmation from the computer processor manufacturing company, in terms of substantiating the news. However, based on indications received from tgdaily sources, there is a strong possibility that an official announcement could be made as early as next month.

Realistically speaking though, this latest development shouldn’t come as a surprise. Rumors concerning the possible spinoff of AMD’s manufacturing entities have been around for quite some time now. And for a good reason I might add. After all, competing against a giant company like Intel (INTC) is no easy task. Anything less than equal competition is almost self-destructive, and AMD’s financial difficulties are proof of this. Only last month AMD reported its seventh quarterly loss in a row - while strains on its balance sheet and considerable capital needs remain persistent.

Splitting the company in two different entities, would certainly help the co. with respect to its P&L and create a cash infusion — if AMD sells off its fabs, which could generate anywhere between $2 billion to $3 billion for each. That much needed capital will then help the company pay off its accumulated debt.

AMD executives have expressed confidence that AMD will achieve an operating profit in the second half of ‘08.

Comments

[JasonC:]

This may happen, but it is dumb. Just sell the whole thing to Samsung and give Intel a real competitor.

2008 Aug 15 01:56 PM

[Smart1:]

They cannot sell the rights to make X86 processors....or they would have done what you suggest a long time ago (well, if they had any sense, they would have).

2008 Aug 18 04:23 PM

[TechPro:]

They cannot sell AMD to Samsung, but what about a company that has the extra cash to throw into AMD's R&D and also has an influence on the sales of that processor and the video cards thereafter.... Which company you ask? With Intel now making CPU's for it's largest competitor (Apple) I am looking forward to Microsoft placing a bid on AMD since they alreay have the license to produce the x86. This would allow Windows to do what Mac has done by being able to design a more stable operating system around one specific processor and video card type. This would in a way flip the market from Intel and nVidia dominance to AMD and ATi since it is more likely that a consumer will stick with a familiar operating system versus a brand of CPU and since AMD is designed to play nice with ATi versus nVidia, ATi cards will most likely be shown favor. Microsoft would be getting up to 3 automatic sales per PC sold, the processor, the video card, and lastly the OS.

2008 Aug 20 11:48 AM