On Wednesday, AMD announced preliminary third quarter results which significantly lowered the expectations for the third quarter ending on October 1st. Originally AMD projected revenue growth in the 8-12% range, but now has to cut that back to 4-6%. This also affects gross margin which should end up being 44-45% contrary to the projected 47%. The final results will be presented on October 27th in their earnings call.
The reason for this rather drastic reduction lies with GlobalFoundries in Dresden. As we have previously exclusively reported and already been confirmed by AMD’s CFO, there are problems with 32nm manufacturing of Llano. Llano was portrayed by AMD as their major growth driver for the quarter. Llano is productized as the A-series APU for desktops and notebooks and is particularly interesting for AMD as it increases ASPs and profit.
The slightly delayed shipments of Bulldozer also contributed to a lower bottom line. Interestingly, the problems with 32nm manufacturing also had a diminishing effect on 45nm supply. AMD explains this with complexities related to the use of common tools across both technology nodes. AMD strained, that they are continuously working with GlobalFoundries to remedy these problems.
Our sources has led us to believe that the problems with GlobalFoundries and the 32nm SOI process on the Llano APU side don’t just lie in the fact that is the first part that utilizes SOI process for the GPU. While AMD was running Dresden fab, the company did not invest in 32nm process in time, and our visit there in March 2010 was quite an interesting one, with more production-grade 28nm nodes than the 32nm ones. Between March 2010 and now, GlobalFoundries invested over $4 Billion in the Dresden complex but even all the cash in the world cannot help you out with the commodity called ramp up time.
GlobalFoundries Fab 1 mega-complex in Dresden fell victim to the shift from making SOI only to SOI and Bulk at the same time, and now you have no less than five clean rooms churning out bulk and SOI wafers for customers such as AMD, Qualcomm and many more.
During GlobalFoundries Technology Conference, held last month at the Santa Clara Convention Center interim-CEO Ajit Manoche stated that the company decided to go with bulk only for the 28nm and 20nm process nodes. While those nodes were scheduled to be bulk only, the fact that AMD now shows successor of Trinity using 28nm node clearly leaves some doubts what is the future of SOI inside the Dresden Fab.
Soitec, world’s largest manufacturer of SOI wafers contacted us shortly after we posted the story on GlobalFoundries and claimed that GlobalFoundries will continue to use SOI on the 28nm and 20nm nodes as well, but so far we haven’t received an official answer from GlobalFoundries. Will AMD continue its investment in SOI when it comes to APU, not just the CPU – remains to be seen.
In meanwhile, TSMC is producing millions of bulk-wafer Bobcat-based Fusion APUs (E-Series, Z-Series) each quarter, clearly showing AMD can produce an x86 CPU core on the bulk silicon as well.