AMD, the world's second-largest microchip maker, lost US$416 million (Dh1.52 billion) in the first quarter of this year. While that was a smaller loss than the $1.4bn it posted in the previous quarter, the company warned there would be little growth in the semiconductor market in the coming months. AMD, which is almost 20 per cent owned by Mubadala Development, is the sole customer of Globalfoundries, a new microchip manufacturing business that is a joint venture between AMD and the Advanced Technology Investment Company (ATIC) of Abu Dhabi.
AMD spun off its manufacturing system into the new venture last month and attributed most of its losses in the quarter to its 34 per cent stake in Globalfoundries and costs associated with the spin-off. ATIC owns the remaining 64 per cent of the new venture. The loss was an improvement on previous quarters, with AMD saying sales of microchips picked up compared with the final three months of last year.
But the company stressed that the second quarter - historically a quiet period for computer sales - was unlikely to offer sustained high demand, and that it was too soon to predict a "bottom" in the microchip market. "I don't know how anybody could say we have hit rock bottom, given the uncertainty in the macroeconomic environment," said Dirk Meyer, the chief executive at AMD, in an earnings call.
Mubadala had written down the value of its investment in AMD by almost Dh1bn, the company said in its annual report issued last week. In late 2007, it paid $622m, or $12.70 per share, for an 8.1 per cent stake in the chip maker. Since then, the company's share price has declined sharply. Mubadala acquired a further 11 per cent of the company for $125m, or $2.15 per share, last month. Despite a poor environment for chip demand, Globalfoundries is pushing ahead with a plan to upgrade its manufacturing facilities and move to a new technological standard that could put it ahead of its competitor, Intel.
The company said it would be able to manufacture chips with components just 28 nanometres - or millionths of a metre - across by late next year. Intel announced late last year that it would invest $7bn upgrading its facilities to a 32-nanometre standard during the same period. The new standard will allow both companies to create microchips that are smaller, more powerful and more energy efficient. Such chips are expected to bring the power of today's personal computers into smaller devices such as mobile phones. ATIC hopes to eventually build a microchip fabrication plant in Abu Dhabi as part of its investment in the new venture.
tgara@thenational.ae
