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AMD to consider building chipsets

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Hardware

Advanced Micro Devices Inc. (AMD) may get into the business of manufacturing chipsets after it opens a new chip factory in 2006, company Chairman, President, and Chief Executive Officer Hector Ruiz said in an interview Monday.

For the most part, chipsets for AMD's processors are currently designed by partners such as Nvidia Corp., ATI Technologies Inc., and Via Technologies Inc., among others, who often hire other companies to manufacture the chipsets. AMD has previously said that it is not interested in building its own companion processor-chipset products like those made by its rival Intel (Profile, Products, Articles) Corp., but Ruiz said Monday that the company is not opposed to deeper ties with chipset partners that could involve manufacturing agreements.

If chipset vendors farm out chipset manufacturing to AMD, the company would benefit in various ways. For example, AMD would generate additional revenue from manufacturing capacity that would otherwise sit unused. It would also have increased control over the process of manufacturing chipsets, which are used in tandem with AMD's chips to control the flow of data around a system.

Right now, AMD does not plan to start developing its own chipset products for the mass market, Ruiz said.

AMD will have the capability to take on additional manufacturing work between late 2006 and early 2007, after a new state-of-the-art chip fabrication plant, or "fab," ramps up to full production in Dresden, Germany, adjacent to a current AMD fab. Growing shipments of the Sunnyvale, California, company's emerging products such as its low-cost Geode chips could take up some of that excess manufacturing capacity, but financial analysts are curious whether AMD has other plans in mind for its older chip-making equipment.

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