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Planned AMD plant will be bigger than plants in Germany

Thursday, March 6, 2008 - 3:09 PM EST

The Business Review  - by Richard A. D'Errico

An Advanced Micro Devices Inc. official says the computer chip manufacturing plant it proposed in Malta , N.Y., would be bigger than either of its plants in Dresden , Germany .

The Malta plant would be 1.5 times larger than the German plants, said Terry Caudell, AMD's director of wafer manufacturing strategies.

"We want to bring that technology back home again," he said. AMD currently has no manufacturing in the United States . Travis Bullard said Caudell's comment doesn't mean the company has plans to move any of its production activities from Dresden to Malta .

AMD (NYSE: AMD) announced in 2006 plans to build a $3.2 billion chip plant at the Luther Forest Technology Campus, which straddles the towns of Malta and Stillwater. Since then, the company has made presentations before the towns of Stillwater and Malta and provided more detail on its plans, which ultimately include three chip plants. But the company has until July 2009 to commit to the project and still receive $1.2 billion in state incentives.

Caudell outlined some of the issues AMD is considering.

"We are in the process of working at what our business structure is going forward," he said.

AMD acquired ATI Inc., a graphics chip maker based in Ontario , Canada , in 2006 for $5.4 billion. ATI's outsourced the production of its chips at plants referred to as foundries.

Caudell said AMD is still working through its manufacturing strategy as the two companies continue to merge. He added: "There's a lot of possibilities to bring the wafers in-house." AMD is also looking at how much capacity it will need in the future. He said one thing is clear: More computer chips will be needed in the future as PDAs, iPods, cell phones and even cars contain a greater number of chips.

So, whether or not the U.S. enters a recession or a slowdown, he said the expectation is there will be a need for more computer chips for future products in 15 to 20 years. He said 80 percent of AMD's chips are sold outside the U.S.

Caudell said when AMD commits to the project, residents can expect AMD to "maintain a presence here for many years to come." Last week, Caudell announced AMD would need about 1,465 employees at the plant, 260 more than first thought. And the first building would be 890,000 square feet, compared with the 800,000 square feet approved by the towns.

The increase in the plant's size and the number of workers needed is the result of additional tools the company plans to use. AMD expects to have between 500 and 600 chip-making tools in the Malta plant.

Construction will take about 18 months, he said.