”We’re Back to Challenge Intel,” AMD

Posted on October 1, 1997 
Filed Under Julian, Nikkei Electronics Asia

By Julian Matthews

Advanced Micro Devices Inc (AMD) of the US has embarked on a huge ramp up of its K6 MMX-enhanced microprocessors in a bid to regain lost ground to long-time rival Intel Corp, also of the US.

“We are now back in contention to challenge Intel’s monopoly and are targeting to capture between 20-30% of the microprocessor market this year,” said Gerald Lynch, AMD’s vice president of sales and marketing for the Asia-Pacific and Japan.

Lynch said AMD will ship between 1 and 2 million units of K6 processors in the third quarter of this year and millions more by year end. This is a sharp rise from the 350,000 units shipped in the second quarter.

“We sold US$100 million worth of K6 processors since it was introduced in April,” Lynch told reporters.

AMD is making a comeback after a brutal 1996 when the company failed to produce a fifth generation processor in time to compete with Intel’s Pentium. Revenues dwindled and the situation was aggravated by a slump in the global chip market.

” The year 1997 will be a transition year for us and a good year in terms of revenue and profit. We are building new factories, and investing in advance process technology, and have a new product. The K6 processor will be the centerpiece of that transformation,” said Lynch.

Lynch said the company returned to profitability in the first two quarters of this year after three consecutive quarters of losses in 1996.

For the first half of 1997, the company reported total revenues of about US$1.15 billion and net income of about US$23 million.

AMD jumpstarted its design for a sixth generation processor when it acquired NexGen Inc in late 1995 resulting in the creation of the K6.

The 8.8 million transistor K6 processor is manufactured using 0.35┬Ám, five-layer-metal process technology at AMD’s US$1.4 billion Fab 25 in Austin, Texas.

The wafer dies are assembled in 321-lead ceramic pin grid array (CPGA) packaging in AMD’s Penang plant and tested in Singapore, prior to shipping.

C H Teoh, managing director of Advanced Micro Devices Export Sdn Bhd (AMD Penang), said the company has invested US$20 million to upgrade and equip its plant in the Bayan Lepas Free Industrial Zone in Penang to a Class 10K cleanroom to accommodate the K6 processor lines.

“Two K6 lines are already operational, while a third line comes onstream in September. Our current capacity is about 20,000 to 30,000 units a day,” he said.

The AMD Penang plant claims to be the largest plant outside North America using the controlled collapse chip connection (C4) flip-chip interconnection technology licensed from IBM Corp of the US.

Extra US$20M to Raise Output

Teoh said AMD Penang will invest another US$20 million to add three more lines to cater for volume production of the K6 by the end of 1998. By then, the plant will have an installed capacity to produce 20 million units of K6 processors per year.

Established in 1972, AMD Penang is a pioneer semiconductor factory in Malaysia and the company’s largest volume producer of its products. Apart from microprocessors, it also assembles and tests memory and logic devices for the company’s six product groups.

Teoh said the Penang plant was projecting to ship 157 million units of its various products this year, up from last year’s 146 million units.

AMD Penang employs 2,750 people, of which 21% are engineers and technical staff. The current operations span 37,160 square meters in four buildings at the Bayan Lepas Free Industrial Zone.

Teoh said the company will discontinue the K5 processor lines this year, because demand is stronger for MMX enhanced processors.

“We will convert our K5 lines to produce chipsets and ICs for hand-held products using ball grid array (BGA) process technology,” he said.

Teoh, who has been with the company for 27 years, said the Penang plant also planned to set up a design center for flash memory products within two years.

“Asia is the fastest growing semiconductor market in the world and it is expected to have double-digit growth rates within the next five to 10 years. AMD is confident of staying ahead of the game in the region,” said Lynch.

AMD’s other plants in Asia include an assembly and test plant in Bangkok, Thailand, a test and device analysis plant in Singapore, and an upcoming assembly and test plant in Suzhou, China.

AMD also has a joint-venture flash memory fab with Fujitsu Ltd of Japan in Aizu-Wakamatsu, Japan, and is building a second US$1.2 billion joint-venture fab at the same site.

Published in Nikkei Electronics Asia, Oct 01, 1997

by Julian Matthews, Malaysian correspondent

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