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AMD 'pursuing foundry partnerships'

Route to market leadership?

AMD is pursuing processor production deals with the world's major chip foundries to support its goal of increasing x86 market share to 25 per cent.

So claims Taiwanese newspaper the Economic News, which says the company has talked to the likes of TSMC, IBM and Fujitsu.

We have argued in the past that AMD might be better off adopting a more fabless approach. And the company has indicated it was at least considering just such a strategy when it announced a foundry deal with Singapore's Chartered in November 2004.

This agreement will see Chartered punch out 64-bit AMD processors in 2006. At the time, AMD said it would continue to produce chips at its Dresden facility. However, the Chartered deal suggested it was looking to build capacity through foundry deals, rather than building more factories of its own - a costly, risky venture.

IBM is a logical partner to further AMD's foundry strategy. The two companies already co-operate on the development of 65nm and 45nm fabrication processes. There are similar links between IBM and Chartered.

AMD currently accounts for around 16 per cent of the x86 processor market. It is forecast to gain market share this year thanks to what investment house Piper Jaffray recently called a "very compelling product line". Intel's line-up was, by contrast, described as "as weak as it has ever been relative to AMD". That said, Intel is expected to slow its market share decline in 2006, thanks to its aggressive 65nm chip roll-out in the early part of the year, according to Piper Jaffray.

Having slept through 2004, Intel will next year "awaken from its execution slumber", although it will take most of this year "to position itself properly" for 2006, Piper Jaffray says.

According to the Taiwan Economic News, AMD CEO Hector Ruiz recently visited the island to meet representatives from key hardware manufacturers, undoubtedly to encourage them to support AMD's processor family more strongly. ®

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