With new factory, AMD ups ante against Intel

Advanced Micro Devices opens a new factory. Will the multibillion-dollar gamble let the company take ground from Intel? Photos: Inside AMD's German fab

For years, Advanced Micro Devices has dreamed of nabbing 30 percent of the market share for PC microprocessors.

Although achieving that goal won't be easy, a new fabrication facility opened in Germany on Friday gives the company the real estate to try.

Fab 36, located next door to an existing fab outside the city of Dresden, adds 13,400 square meters of clean-room space to AMD's manufacturing arsenal. Combined with factory capacity at Chartered Semiconductor that's available to AMD under an existing alliance, AMD will have a substantial part of the infrastructure needed to churn out 100 million processors a year by 2008, said Daryl Ostrander, senior vice president of logic, manufacturing and technology at AMD.

Running full tilt, that should be enough to hit the elusive number, or at least help AMD participate in all segments of the PC market.

"We can get to 30 percent market share from Chartered and Fab 36," Ostrander said. "We have become a manufacturing powerhouse."

Roughly 1,000 people will work in Fab 36.

Though chip designers often get most of the attention and glory in the industry, semiconductors rise and fall through manufacturing. Efficient manufacturing techniques and its meticulous "copy exactly" philosophy for building fabs have been significant pillars in Intel's rise, according to, among others, Chairman Craig Barrett and "employee No. 3" Les Vadasz.

Conversely, AMD often stubbed its toe in the past in getting chips out of the factory, resulting in product delays, chip shortages and huge financial losses. In terms of manufacturing, AMD has typically done better than most other chipmakers, according to Dan Hutcheson, CEO of VLSI Research, one of the chief research houses on semiconductor manufacturing. It was simply pushing too hard to stay up against the mass-production monster that is Intel.

In one instance last decade, AMD discovered that circuits were peeling on its chips. An investigation uncovered that a person in purchasing switched suppliers of a particular chemical. Although technically the same chemical, there was an extra atom in the new stuff, causing problems.

"Microprocessors are one of the most difficult things to manufacture. It is easy to fall out of bed," Hutcheson said.

The situation began to change in the late '90s under executives such as Bill Siegel. Now the company wins citations from, among others, Sematech, an industry trade group.

The secret sauce in AMD's production is a methodology the company calls Automated Precision Manufacturing. Under APM, the chipmaker can tweak the manufacturing recipe of a single wafer as it winds through the entire production process, which takes weeks. In the past, semiconductor makers had to run several wafers, look at the results and then adjust the formula.

As a result, AMD can get to what the industry calls "mature yields," or the situation when the majority of chips in a given wafer work. APM also lets the company ramp up

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