AMD Mum On Dresden Fab Plans, Fueling Speculation

MUNICH, Germany — Advanced Micro Devices appears to have reached a decision about the future of its production facilities, but it remains unclear if the company is going to build another fab in Dresden, Germany.

While AMD is scheduled to disclose its plans on Monday (May 29), speculation is rampant here as to the processor maker's next move.

For almost a year, AMD has hinted at plans for building a new wafer fab to produce microprocessors. With AMD already running two fabs in Dresden that employ 2,800 workers, many here hope AMD will add a third, especially since fab processes in Dresden have been running well.

Still, CEO Hector Ruiz has not committed AMD to a third Dresden fab. Last December in Singapore, Ruiz said he could foresee a new AMD fab in the city-state. AMD already operates a development center in Singapore and maintains close relations with local foundry Chartered Semiconductor.

"We will have to break ground for a new fab in 2006," Ruiz said last December. He also said the company is considering "multiple options" for the location of its new fab.On Friday (May 26), AMD provided short notice of a press conference Monday in Dresden. There, the company will announce "a project that will be of great importance for AMD." The exact subject of the gathering so far remains unknown. Company executives were mum, even declining to identify the AMD executives who will make the announcement.

The secrecy has fueled speculation here. Several German publications reported that "Dresden will get a third AMD fab." The Financial Times Deutschland, however, threw cold water on those reports. Without disclosing its sources, the newspaper reported in its online edition that AMD will invest 1 billion euros ($1.3 billion) in Dresden—but only for a comprehensive modernization of its existing fabs, not a new one.

New fab or not, AMD has big plans for expanding its production. Through 2008, AMD plans to invest a total of $ 5.8 billion in production capacity. It has reportedly budgeted $2.5 billion for a third wafer fab, be it in Dresden or somewhere else. The fab is expected to create about 1,000 jobs.