Now's the time to recall why Advance Micro Devices Inc., isn't just an important company, it's a critical one. If it wasn't for AMD, we might still be writing stories about the latest, greatest 32-bit x86 servers.
The news is that AMD is splitting off its manufacturing company in an $8 billion investment deal from Abu Dhabi. The general view by analysts is this: AMD has been struggling and separating its manufacturing helps to strengthen its ability to focus on chip development.
Foreign firms that own manufacturing capacity here employ millions of U.S. workers, and it is government policy to encourage this investment. But foreign investment can also help with the transfer of technology and manufacturing capability outside the U.S.
The investment by Abu Dhabi is very different from something like Belgium-based InBev NV/SA's $52 billion purchase of Anheuser-Busch Cos. You can brew beer at home and dream big. But you need billions to start a chip company and change a market. Abu Dhabi's is taking a key role in a fundamental part of the tech economy, and by extension, U.S. economy.
Competition routinely forces tech vendors to change paths and develop better products, but rarely do the stories get as good as AMD's assault on Intel’s x86 universe.
In April 2003, AMD released Opteron, its first 64-bit x86-compatible server chip. It gave users the ability to run 32-bit and 64-bit x86 applications on the same chip.
Intel didn’t have anything like it. Hewlett-Packard Co. was focusing on Intel's Itanium as its 64-bit platform. It rejected Opteron as an “unnecessary complication” to its strategy.
Until Opteron, the x86-world was at risk of turning into a Soviet-style planned economy.
As Computerworld writer Russell Kay pointed out in a 2004, "the industry-leading vendors had stunningly misread what the market wanted …"
And did they ever.
The high performance computing users –- the fastest upgrading club in the world –- jumped on Opteron. They immediately recognized the chip’s capabilities and its perfect fit for Linux.
The business users were right behind and big server vendors, including HP, responded with Opteron-based servers. Customers wanted them.
In 2004, in New York City in the Rainbow Room, Hector Ruiz, chairman of AMD, met with analysts and press to talk about the chip. This was a great time for AMD.
Ruiz called Opteron a "wrecking ball" aimed at guess what?
But Opteron wasn’t a wrecking ball. It was a life saver. It gave customers new options and forced Intel to react and improve. Intel is better company today because of AMD.
Abu Dhabi’s investments ensure that a new fabrication plant near Albany New York will be built, no small thing in this economy. Oil money is the only money flowing right now. The country has already invested heavily in AMD and the two are now tightly linked. Will that turn out to be the best for competition and the U.S.?
The economic problems will eventually recede and the more fundamental issues will emerge overtime, namely whether the U.S. will retain intellectual and manufacturing capital in this critical sector of its economy. AMD is critical to keeping competition in the chip market, and so now is Abu Dhabi. That's the new reality today.
Patrick Thibodeaux Computer WorldUS EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
