Is AMD Shakeup Beginning Of 'Asset-Light'?

Advanced Micro Devices has been remarkably tight-lipped about its proposed "asset-light" strategy since CEO Hector Ruiz sketched out the basics with analysts on an April, 2007 earnings call. That's led analysts to speculate as to whether such restructuring would simply mean shedding low-yield properties or if AMD is planning to go completely fabless -- leaving rival Intel as the only major chip maker with ownership of a total x86 package, from foundry to fanboy.

Meanwhile, we keep waiting for Sunnyvale, Calif.-based AMD to make some clear pronouncement, to take us by the nose and say, "This is what asset-light is." But what if asset-light happens, not with a bang, but with a whimper? What if it's happening right under the noses we're waiting to be led by?

AMD announced in April that it would be laying off 10 percent of its workforce by the third quarter of this year, amounting to some 1,600 employees out of 16,800 worldwide. In that April 17 earnings call, Ruiz said some 215 employees had been let go from AMD's Austin, Texas plant, AMD's largest in the United States.

Just two weeks later, an AMD source told ChannelWeb that layoffs in Austin and the company's corporate headquarters in Sunnyvale were pretty much complete. The source said AMD's channel sales and marketing teams remained intact, suggesting that forthcoming layoffs would happen on the design, engineering and manufacturing side, outside of the U.S.

If that's true, and Ruiz's figure of 200 or so pink slips handed out in Austin have held up, then it's possible 1,000 or more AMD employees remain to be trimmed from the back-end of the house. On the face of it, that would be some manufacturing-light maneuvering right there.

On the April 17 earnings call, Ruiz gave signals that AMD would pursue a lighter sort of asset-light strategy. That is to say, not going totally fabless but dumping "non-core businesses if they feel to meet the company's strategic goals." More details, as usual, were not forthcoming.

What does it all mean? AMD is currently holding its three-day Global Channel Summit in Dresden, Germany, home to the chip maker's Fab 30 and Fab 36 manufacturing facilities. The chip maker certainly seems committed to its German fabs. A proposed AMD fabrication plant in upstate New York is another matter. In March, an AMD executive told local media that the company was still "optimistic" about investing in a new, $3.2 billion fab at the Luther Forest Technology Campus in Saratoga County, but that AMD had not yet decided to proceed with building the proposed Fab 4X.

This week's organizational shakeup at AMD also sends cryptic signals as to the chip maker's commitment to maintaining its own foundries over the long term.

Former server/workstation boss Randy Allen's replacement of Mario Rivas as chief of AMD's computing solutions group has garnered the headlines. But the creation of a new Central Engineering organization within AMD could be more intriguing. Could this new unit be tasked with taking AMD to a less fab-reliant future? Competitors like Nvidia have shown that it's possible to be successful by focusing entirely on design and marketing, and letting others handle the manufacturing of your chips.

AMD is unlikely to pull off anything so dramatic in the short-term. But we could be seeing asset-light unfolding before our very eyes.