AMD to invest $2.5 billion to meet Global Demand

Sunnyvale, California based Advanced Micro Devices (AMD), announced yesterday that it planned to invest a total of US$ 2.5 billion in expanding microprocessor manufacturing capacity at its factory in Dresden, eastern Germany, over the next three years, through the implementation of three new projects.

The most of the investment - to be spent over three years, will go into a new semi-conductor plant to be called AMD Fab 38 (existing Fab 30) at company's Dresden site.

AMD's first chip plant in Dresden, known as Fab 30, will get renovated with refitting of equipment to handle larger silicon wafers that will yield more than twice as many processors as existing machinery. This Fab 30 factory will be renamed as Fab 38.

The American chip manufacturer will also build a new clean room facility on its Dresden campus for bump and test requirements-one of the final stages of the manufacturing process where wafers are prepared to be shipped for packaging, which will support both fabrication facilities. Formerly, the clean room facilities for bump and test activities were located within Fab 30 and Fab 36.

The huge investment will create up to 420 jobs in the next three years in Dresden, in the state of Saxony, the company officials reported. However, majority of amount would go to machinery needed to produce 300-millimeter wafers, Hans Deppe-General Manager of AMD's Dresden plant, said.

AMD's expansions would let its Dresden facilities process a combined 45,000 12-inch wafers per month by the end of 2008.
AMD's investment plan comes as the company is making progress against Intel. The chip maker company is steadily gaining market share from larger rival Intel Corp. and highlighting the company's desire to prove that its once-crippling supply problems are a thing of the past.

Moreover, AMD has increased production of advanced, dual-processor server chips as Dell, which has used only Intel processors until now, announced this month that it would begin using an AMD chip in high-end servers.

AMD Chief Executive Hector Ruiz said in a statement, “As global demand continues to rise for AMD products, we are scaling our manufacturing capacity intelligently to meet our customers' growing needs."

At the end of the financial year in March 2006, AMD had 21.1 percent of the global chip market, up from 15 percent at the end of 2003, according to Mercury Research- a small, focused research firm providing clear, concise, and detailed information for PC-related semiconductor and components markets.

AMD stock closed at $ 31.63 after Friday's trading, high 2.1 percent. The stock has closely doubled over the past year, while Intel has dropped by almost a third.

The second-biggest supplier of x86-compatible processors, and the leading supplier of non-volatile flash memory said that it will spend an additional $ 2.5 billion to upgrade and expand its two factories in Germany in addition to its sizable investment in the former East Germany.