San Francisco (CA) – Hector Ruiz’ time at the AMD as we know it today is coming to an end. Ruiz recently stepped down from his role as CEO, but kept his position as chairman of the board with the purpose of launching AMD’s Asset Light and Asset Smart strategies, which are expected to split AMD into two entities. And this event is only weeks away, industry sources told TG Daily.  

It is widely expected that Asset Light will part AMD into two companies – one that is led by newly crowned CEO Dirk Meyer and a focus on the development of chip technologies and a manufacturing arm that will take over AMD’s fabs. Our sources indicated that critical decisions are being made at this time and the official announcement of Asset Light and Asset Smart will be made next month.

Hector Ruiz’ future role remains a mystery, but it is expected that Ruiz will remain with AMD in one capacity or the other, possibly as CEO of the manufacturing company. We previously published an extensive analysis that sheds some light on the company’s future direction. It appears that much of Ruiz’ future has already been ironed out and AMD’s marketing team is now working on a way to preserve Ruiz’ legacy in AMD’s history books to avoid the perception that the executive caused the company’s current critical state.

Officially, there is virtually no clear information on the announcement and the direction of Asset Light/Smart provided by AMD. In the company’s Q2 earnings call, chief financial officer Bob Rivet stated the announcement will not be a 2009 event and that the company will announce it “as soon as [AMD] can get it down which is what Hector [Ruiz] is focused on.”
 
Ruiz told Tim Luke, an analyst with Lehman Brothers, that the company has made “enormous progress” with Asset Smart and hopes that it will be able provide details about the deal “before the end of the year.” Apparently, the company was able to remove any roadblocks that could have prevented a deal and will not have to raise additional capital – such as from the sale of manufacturing equipment. Rivet also stated that Asset Smart will not be a requirement for AMD’s break even goal – which, however, leaves out the general belief that hitting a break even point is a requirement for Asset Smart. At this point, AMD still says that it will “achieve that break even and actually make money in the back half of this year,” according to Rivet.
 
It is clear that Asset Smart will be a critical event for AMD and its employees. While AMD is not offering answers yet, our sources have had a good track record and we wish the company good luck! Ruiz offered an indication just how critical this step will be for AMD: “All I can tell you right now is that if it were something as simple as going to a foundry it would be very easy to do and talk about it but it is actually something we believe is uniquely tailored to AMD and uniquely tailored to our customers and our company and therefore much more complex to do than just a general outsourcing scenario.”

AMD strategy is like

Aug 12, 2008 01:32     

The boat is sinking, abandon boat now, or both will sink.
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ati

Aug 12, 2008 03:55     

so.. then the will unmerge with ati? i love amd and i love ati even more.. it would suck if they went down :/
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Asset Smart?

Aug 12, 2008 04:12     

I've read a number of articles on "Asset Smart" and always walk away less clear as to what this is/will be. I'm not even sure if it's a product or service. Also "Asset Smart" sounds like the worst kind of exec/board jargon for when the bigwigs are unsure what they're really talking about. IMO: Someone in AMD's branding dept. dropped the ball on this one.
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Proofread much?

Aug 12, 2008 10:01     

"It is clear that AMD will be a critical event for AMD and its employees."
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sinking boat

Aug 12, 2008 11:51     

yes, the boat is sinking , you got the front half while I got the back of the ship? What about stoping the sinking? Well....
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Stop management, start engineering

Aug 12, 2008 12:35     

I wonder how much time AMD management reads about CPU technology whilst TSMC's Morris Chang spent at least 4 hours on wafer fabrication papers. The sad things about management and economy is, both ideas rendering themselves to minimum. Management means less human managing, Economy means less price. And wallStray is a joke. To EU, judgment is the job of any independent entity, by being lazy and outsourcing your judgment to wallStray firms serve you right for the credit crunch and loss. The same to center banks, and the talents hired. :)

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RE: Asset Smart?

Aug 12, 2008 16:01     

Asset Smart is a smart allocation of AMD's assets. It is neither a service, nor a product. End users need not care about it. It is a way for AMD to get rid of the boat anchor that is their fabs. (They're only really a boat anchor when they are not operating to capacity, but still cost a ton, i.e., in a slowdown like they're currently experiencing). With a smaller engineering company, they have a lower break even point, and are not saddled with the multi-billion dollar costs of building and sustaining their manufacturing. I don't see this as a failing of their marketing. I don't see this as something that needs to be marketed to consumers, just financial experts and companies that will be doing business with the 2 new entities. And that is what they are doing.

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Microsoft Buying AMD?

Aug 15, 2008 11:32     

Heard from a friend of mine that works for MS that there may be a plan to purchase AMD. This way Microsoft has an inside hand in making the chips their OS will run on and all allows them to grab a profit on not only the OS, but the CPU and GPU. One sale ends up being 3 products instead of one... Not to mention with some extra cash, AMD's R&D would crush Intel and nVidia.
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AMD to finacne strategy with 1.2 BILLION from NYS Taxpayers

Aug 18, 2008 13:09     

New York taxpayers have offered AMD 1.2 BILLION to build in Malta, NY. This is a huge pile of money and AMD has been working to slit the comapny but STILL keep the taxpayer gift that will help them shed it's unprofitable manufacturing arm. Basically, NYS Taxpayers are bailing out this company with public funds.
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AMD split/TSMC

Aug 25, 2008 02:14     

This is an interesting article. I have just started to look at AMD as an investor and your general thesis makes sense. First, the rumours of an announcement seem to coincide with the expected zoning approval for the Malta Fab4x next week. Hector is also traveling to Malta next week. I imagine that if any cash infusion/merging of Fabs is going to happen they will want to know that government go ahead is in place for the expansion that will follow. In essence I think the delay may have had to do with waiting for these final approvals from NY politicians. Once that is locked in they can close the final details with the partner(s). My guess is that this could take another month? It depends on how advance the discussions are with the potential partner(s). My guess is that TSMC/Mubadala deal will make the most sense. TSMC has the scale and needs new capacity. It would also even out its product offering. Essentially TSMC could get the fabs at a significant discount to what it would cost to build. As for Mubadala (Abu Dhabi) I think they would be interested in providing capital for the Malta Fab, just to unlock the value they must think exists in its previous US$600 million investment (now worth roughly US$300 million). As for being locked into a lic. agreement requiring AMD to manufacture in house, I don't think this is a problem. First, by the time any case would be heard the license would be expired (3-5 years). They may be willing to pay any expected penalty, as the benefits (survival) would outway any financial penalty. It could also lead to an earlier settlement with Intel int he anti-trust case. Essentially, AMD says they'll go away if Intel lets them go to a fab lite model. If this all were to happen AMD could actually become an effective competitor. It would also explain why this has all taken so long.

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