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It was obvious that AMD s current financial status, and its competitive circumstances with Intel in the multi-core era, were both untenable. Drastic deed had to be taken. But can AMD come backside without owning its own processes?

Faced with a critical verdict about how it could money the expansions it needed in order to build processors that can help it regain its competitive balance against Intel, AMD made a verdict that would make Solomon weep: It sold a greater piece chance in its most treasured possession, its fabrication facilities, to an entirely new corporation called ATIC, comprised of foreign wellbeing that have agreed to place former AMD workers at the cranium of its new supervision company.

With a new corporation in principal control of AMD s existing foundries and leading the hard work to build new ones, the thought is for the Texas corporation to continue to develop new computer chip technology. But here s the trouble Throughout its entire history, AMD has always developed that skill working in extremely close contact with its foundries. In fact, it s that close contact that enabled AMD to find the efficiencies it needed to beat Intel in Microchip show from 2002 to 2006. What happens to that vital linkage that has been the key to whatever triumph AMD has ever had?

That s my biggest trepidation the detail that having that facts foot and that know-how in-house about the progression technology, is critical, especially when you re responsibility highly integrated and timing-sensitive products, said Jim McGregor, principal of semiconductor psychotherapy for In-Stat and co-author of the heralded Memory chip Description newsletter, in an talk with BetaNews this afternoon. Just look at all the tribulations they had with Barcelona, and they had the know-how in-house.

When McGregor first learned of AMD s plans, he told us, he asked AMD officials where the PC fabrication know-how determination go. All of it, he says AMD told him, determination go to the new article currently organism called The Foundry Company. And who is it that determination be responsibility the chipping in with IBM, in the progress of new fabrication and 22 nm fabrication technologies. Again, McGregor was told it would be The Foundry Company.

That s like a switchblade through the heart, he remarked.

Other computer chip firms, McGregor pointed out, have moved to a fabless fabrication reproduction -- where they outsource their fabrication to others, like Qimonda -- and still maintain control of not just the design know-how but the progression know-how as well. Infineon, he noted, what s left a affiliate of IBM s progression alliance.

Back in the 1990s, the initiator and President of Cypress Semiconductor, a guy named T. J. Rogers , responded to persons who were comparing the truthfulness of a semiconductor corporation that owned its own foundries with one that didn t. Real men have fabs, he said.

With that maxim having been given new being in the wake of AMD s decision, McGregor paraphrased it gracefully. I can justify the piece where community say maybe real men don t need to own fabs. But real men definitely had better know what they re responsibility when they get to a fab.

Illuminata s principal IT consultant Gordon Haff doesn t share McGregor s concern. Though he agrees that some deed on AMD s piece was desperately necessary, he also feels that AMD s new dealing reproduction could secure its long-term future.

The funds nest egg for AMD to continue investing in its own fab-even given its RD concord with IBM...were just getting too large to contemplate for the long term, Haff told BetaNews. That s not the only financial difficulty facing AMD, of course, but it was a big one and arguably a structural one given fab funds asking price increases. As a fabless computer chip design company, it s at least easier to see AMD as a long-term player.

But Haff also says it determination be critical for AMD and the new Foundry Corporation to maintain that close bond.

The difficulty with processors is that it doesn t stuff how great your designs are rider your progression skill is behind the curve, stated Haff. To the level that you can get onto the same curvature , or close, in progression tech, there s a bunch more chance to have good design translate into actual artifact superiority.

Insight64 principal psychiatrist Nathan Brookwood believes the current praise emergency gave AMD rebuff alternative with deference to how it would execute the growth tactics necessary to build the next age band of CPUs.

As Brookwood told BetaNews, This move clearly keeps AMD in the game. They had reached the confines of their balance due capacity, and had rebuff contact to justice markets, so they had rebuff tactic to fund the retooling of Fab 38 for 300 mm production, nor to start the New York shape fab. Now they can do both. I think ATIC determination want to see AMD succeed, since they determination be the Foundry Corporation s biggest client for some point to come.

Next: Jim McGregor on the scary path ahead...

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