Advanced Micro Devices Inc’s (AMD.N: Quote, Profile, Research, Stock Buzz)future depends on still-murky details of a plan to overhaul its manufacturing, and Wall Street is impatient.
AMD now lags far-larger rival Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz) in chipmaking technology and could be about nine months behind Intel when it introduces chips with elements as small as 45 nanometers in the second half of this year.
The company has also reported seven straight quarterly net losses in a row, and it’s hard-pressed to afford building a new, next-generation chip plant, which can cost $3.5 billion, with $5.6 billion in long-term debt on its books.
Together, Intel and AMD control virtually the entire market for microprocessors, the electronic brains of personal computers and server computers that comprise corporate networks.
AMD’s future hinges on what it calls Asset-Smart strategy: whether it adds capacity by striking a deal to use foundries of an Asian contract chipmaker such as Taiwan Semiconductor Manufacturing Co Ltd (2330.TW: Quote, Profile, Research, Stock Buzz), or perhaps signing an agreement with longtime partner International Business Machines Corp
(IBM.N: Quote, Profile, Research, Stock Buzz).
“I don’t know what Asset-Smart looks like, but anything is better than today overnight payday loans. Anything is better than going out of business because you run out of money” said Stifel Nicolaus analyst Cody Acree. “It might be a partnership with IBM or TSMC or it might be an outright sale of their manufacturing.”
Executive Chairman Hector Ruiz, who led AMD as its CEO for more than six years and stepped aside in mid-July to hand the reins to Dirk Meyer, is driving the plan to completion and has repeatedly promised answers by the end of the year.
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