The European Union (EU) Commission has approved AMD's (NYSE: AMD) 
petition for financial aid for a planned 300-millimeter microprocessor wafer facility. The fabrication facility, known as AMD Fab 36, is being built in Dresden, Germany, next to AMD's Fab 30 facility.
As a result of the ruling, Germany and the Free State of Saxony may now invest approximately Ư545 million (about US$692 million) into the plant -- the most allowed under the EU grants and subsidy program to help certain regions within the EU attain greater economic growth, AMD spokesperson Drew Prairie told the E-Commerce Times.
"We greatly appreciate the EU Commission's decision in favor of AMD," AMD CFO Bob Rivet said. "With this approval, our new project has passed a key financial milestone as we begin the process of building, equipping, and ramping the new fab."
The project, which broke ground November 20th, is expected to cost about $2.4 billion in total over the next four years. The money from Saxony and Germany will come in the form of investment allowances and grants.
Repeat Performance
AMD spokesperson Robert Keosheyan told the E-Commerce Times that AMD chose to build a second plant in Dresden because of the tremendous success it has had with its Fab 30 plant.
Keosheyan said the employees working at Fab 30 have been of the highest quality and have demonstrated a deep level of engineering talent. He expects AMD will augment that worker base with new talent from the region.
Specifically, AMD expects it will need 1,000 employees to run Fab 36, which is targeted to go into volume production in 2006.
AMD was confident that the EU Commission would approve the financial incentives offered by the German government, Keosheyan said, because the company paid strict attention to the EU's requirements, regulations and guidelines when it set out its petition.
"No, we were not ugly Americans," Keosheyan said when the E-Commerce Times quipped about whether or not AMD could have been portrayed as such.
What Sorts of Chips
Back in November, AMD said Fab 36 would make 300-millimeter wafers using APM (Automated Precision Manufacturing) 3.0, its third-generation solution for automated manufacturing.
Shane Rau, a senior research analyst for PC and consumer semiconductors at IDC, told the E-Commerce Times that a 300-millimeter chip is more cost-efficient per processor than earlier 200-millimeter versions. The reason is that a 300-millimeter wafer, from which chips subsequently are made, offers a larger diameter with more circles of processors etched in each one.
"Quite likely, K8 chips will be made in this facility, possibly even [the next-generation] K9 chips," Rau said. The K8 processor family includes the AMD Opteron chip, a hybrid CPU that has generated buzz because of its compatibility with both 32- and 64-bit software.
However, Keosheyan said that while AMD plans to manufacture its 64-bit line of processors at the facility, the company cannot predict which generation of processor Fab 36 will make, given that Fab 36's first silicon is not expected to be produced before 2005. He noted that AMD may be past the K8 to a more advanced generation by the time volume ramps up.
What Will Intel Do?
Intel (Nasdaq: INTC) , AMD's primary competitor, has yet to announce its own version of a hybrid 32/64-bit processor to compete with AMD's Opteron. Intel's high-end Itanium chip handles only 64-bit applications, while its low- and mid-range Xeon chip is 32-bit only.
Because of the buzz around Opteron, rumors "have been coming at me from all sides," Rau said, including whispers of a project known as YAMHILL or CT.
However, Rau went on to say he thinks it is quite likely Intel will release a chip to compete directly with Opteron, adding that Intel may announce something at its Developer Forum, which starts February 17th in San Francisco.
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