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10 Oct 2008
Channel players have asserted that AMD’s decision to fragment its business could help shore up its balance sheet and take a slice of Intel’s market share.
The firm announced last week it would spin off its manufacturing operations with the financial backing of Abu Dhabi-based Advanced Technology Investment Company (ATIC). The manufacturing arm will initially be known as The Foundry Company and will be more than 50 per cent owned by ATIC, with AMD retaining the rest. The company will still manufacture AMD chips.
AMD will then concentrate on designing and developing new products. The manufacturer is in need of a change in fortunes following six consecutive quarterly losses and the ousting of former chief executive Hector Ruiz after a $1.2bn (£690m) loss in the second quarter of 2008.
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Early indications are promising as AMD’s stock closed 8.5 per cent up on the day of the deal, having shot up by more than 30 per cent earlier the same day.
Rupert Lowery, managing director of components reseller Overclockers UK, claimed that AMD’s restructuring could be good news for the components market.
“Markets build on competition,” he said. “We are in the business of selling innovative products and it is important that there are companies like AMD out there.”
Matthew Wilkins, principal analyst of compute platforms at iSuppli, said the announcement could help AMD return to making money. “Building fabs is incredibly expensive and that has weighed down AMD’s balance sheet,” he said. “It now has a partner that is going to take a lot of that fiscal responsibility and that will help its bottom line.”
Catriona Atthews, graphic sales manager for AMD distributor Man and Machine, is another to claim increased competitiveness would benefit the components channel. “The announcement is very welcome news,” she said. “By spinning off the manufacturing operations AMD can focus more time on the development of its technology.”
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