Blame game
Chip maker AMD has announced that its Q3 results will fall short of its previous forecasts, and that the primary reason is a shortage of Llano APUs thanks to continued manufacturing issues at GlobalFoundries.
This is not great news for AMD, or for GlobalFoundries. When the two companies announced an amendment to their service agreement that compensated AMD in the event of poor 32nm yields back in April, this was spun as a ‘worst case scenario' move, and GF assured us the 32nm troubles were behind them.
Well we guess some new problems must have arisen, in that case, because the worst case scenario seems to have come about. While AMD will be compensated by GF for its failings, that clearly isn't enough to make up the shortfall in anticipated revenues from Llano which, let's not forget, is AMD's biggest product launch in years.
And we have to assume the damage to AMD extends beyond just lost Llano revenues. It will have put a lot of pressure on OEM partners such as HP to not just build, but promote Llano notebooks and now it can't supply the chips in the quantities expected.
For GF, while this may well be just an issue associated with Llano - and the unprecedented move to a new architecture and a new manufacturing process in one go - this kind of underperformance can hardly improve its standing in the eyes of potential customers, especially at a time when it doesn't even have a permanent CEO.
AMD says revenue for Q3 is expected to increase sequentially by around five percent, instead of the forecast ten percent, with margin being a bit lower than expected too. And the Llano problems have even affected the supply of 45nm chips as the two processes share some tools. All this mayhem at GF also led AMD's ‘Interlagos' server chip to be delayed too. In other words, according to AMD, it's all GF's fault.
But it's not all doom and gloom on the fab side of things. New York state governor Andrew Cuomo has announced a massive investment commitment of $4.4 billion to develop 450mm wafer technology in upstate New York - where GF and IBM already have extensive operations.
And this investment comes, not just from GF and its fab allies IBM and Samsung, but rivals TSMC and Intel too. Meanwhile the state itself will invest $400 million in the College for Nanoscale and Science Engineering in Albany, which we've visited and can confirm is already very impressive.
Intel boss Paul Otellini said: "The Global 450 Consortium is a critical element to moving the semiconductor industry to next generation wafer size. This new technology will reduce the cost of production, increase productivity for manufacturers and reduce our environmental footprint on a per chip basis. The involvement of the College for Nanoscale and Science Engineering and the State of New York will enable the industry to meet its goals."
Ajit Manocha, CEO of GF said, "The unique mix of industry and technology partners located in New York is a key component of our strategy of expanding our local operations, including the Fab 8 campus in Malta, N.Y., which will be the world's most advanced semiconductor fab when it is completed in early 2013."
Lastly, former AMD product boss Rick Bergman must be feeling especially pleased with his new job as CEO of ‘human interface solutions' company Synaptics, given the ongoing troubles at his former employer.
"Rick is a visionary leader with a proven track record of driving performance to a higher level," said Francis Lee, chairman of Synaptics' Board. "He is an ideal fit to help Synaptics further capitalize on the rapid growth of capacitive touch technology within an expanding range of markets."
Congratulations Rick, and nice timing, but we hope you've already cashed in your AMD stock options as the company's shares were down five percent during the day yesterday, then fell a further seven percent after the Q3 announcement.
