Menu
Analysts: Spin-off puts AMD back in the fight with Intel

Analysts: Spin-off puts AMD back in the fight with Intel

Wall Street welcomes news that a Middle East firm is taking a load of debt off AMD's back.

By splitting off its manufacturing operations into a separate company, Advanced Micro Devices could be on track to become the nimble, innovative company that once had Intel on the run.

AMD Tuesday announced plans to spin off its manufacturing operations into a separate company. With this dramatic turn, struggling AMD not only rids itself of the financial burden of running fabrication plants, it gains a hefty influx of cash from its partner in the deal, Advanced Technology Investment Co. (ATIC).

"I don't think this will give us a whole new AMD, but the industry will be dealing with an AMD that's a good deal more nimble because they won't be dealing with the same financial burdens or dealing with the fab plants," said Dean McCarron, president of Mercury Research in Cave Creek, Ariz. "Because this lowers the break-even point for AMD, it gives them staying power in the market and will help them focus on design and sales again."

Early in the decade, AMD had grabbed a solid footing in the semiconductor market. Its success was a key reason for Intel's stumbles between 2003 and 2005. But come 2006, Intel responded with a reorganization that curbed AMD's momentum. After that, AMD stumbled under the financial burden of acquiring ATI Technologies Inc. and the delay of its Barcelona chip.

Both McCarron and Dan Olds, principal analyst at the Gabriel Consulting Group, said simply getting a big chunk of debt off its back could help the chipmaker regain some of the fire that once had it nipping at rival Intel's heels.

"It's like the old AMD after a spa and rehab vacation," said Olds. "They've come back stronger financially and in better shape overall. They're still the same company and they still [partially] own their fab operations. It's like they got a rich uncle to help them out."

Word of the spinoff was welcome news to Wall Street, which responded by lifting AMD's stock by 18% this morning - at the same time that the Dow had dropped by 200 points, noted John Lau, a senior semiconductor analyst and managing director at Jefferies & Co., who predicted the spinoff early last month.

Lau said the spinout of the fab operation is a necessary move for AMD. "This fab spinout changes the equation on how to remain competitive," he said. "Now it's a design race."


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags AMD

Events

Featured

Slideshows

Channel kicks 2021 into gear as After Hours returns to Auckland

Channel kicks 2021 into gear as After Hours returns to Auckland

After Hours made a welcome return to the channel social calendar with a bumper crowd of partners, distributors and vendors descending on The Pantry at Park Hyatt in Auckland to kick-start 2021.

Channel kicks 2021 into gear as After Hours returns to Auckland
The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

Hundreds of leaders from the New Zealand IT industry gathered at the Hilton in Auckland on 17 November to celebrate the finest female talent in the Kiwi channel and recognise the winners of the Reseller News Women in ICT Awards (WIICTA) 2020.

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards
Show Comments