AMD's Chief Executive Talks About Going Fabless

Dirk Meyer, chief executive officer and president of Advanced Micro Devices, implied in an interview that the company had plans of selling off its manufacturing facilities in the idea of turning to a fabless model of operation. Although there were no specific details disclosed, the fact that the idea surfaced implies an already made decision.

“We’re going to go away from a captive fab model to more of a fables model for the CPU part of the business. Longer-term, it relieves us of the burden of having to shell out cash for these gigantic factories. So it will be more of a pay-as-you-go model like a traditional fables semiconductor company,” said Dirk Meyer, chief executive officer and president of Advanced Micro Devices, in an interview with Fortune.

The news from last week implied that AMD was going to spin off its manufacturing facilities by the end of the year and that some details on the action would be officially unveiled during September. Now, there are some analysts that would say AMD had already decided to sell off fabs and started its so called “asset smart” strategy.

AMD finds itself in this position due to the huge costs chipmaking requires. The chips are fabricated into state-of-the-art manufacturing facilities which need constant upgrading, and the costs for this actions adds to the expenses that go on human resources as well. The business eats up billions of dollars, and AMD is unable to keep up with this amount of money. Another reason for the company's fall is the acquisition of ATI Technologies back in 2006. This maneuver affected production and caused constant delays, as to the company's quad-core processor and other products.

“Unfortunately we bought a company some of whose businesses went downhill at the same time ours did. We’re in the midst of really lousy financial performance, and it’s that piece that we’ve really got to turn around,” said Mr. Meyer.

Outsourcing the facilities is probably the best thing the company can do at this moment in order to make improvements in its financial sector. Meyer didn't give any detail on the timing of the deal, but he said that it would bring a lot of money to AMD, and that the manufacturing operations would be handed to a company able to better compete against Intel's operations.