Intel Takes Spotlight, AMD Slinks Into the Shadows

(MoneyWatch)  It seems only fitting that on the same day Intel announced it will spend $7 billion over the next two years to modernize and expand its manufacturing capacity, rival chip maker AMD had to admit that shareholders failed to approve the financing of construction of a new plant of its own.

Intel's star has been rising of late, while AMD management announced last year that it would split the company in two in a last-ditch effort to save it.

So while Intel is promising to ship more powerful and economical chips later this year, AMD's new project is stuck in limbo because fewer than 50 percent of shareholders have voted so far on a deal allowing investment by the Emirate of Abu Dhabi that would finance construction of a plant near Albany, N.Y.

The Abu Dhabi investment is part of the complex restructuring announced last year that will see AMD spin off its chip-making division into a separate company, 44 percent owned by AMD and the balance by the Advanced Technology Investment Company, which is owned by the government of Abu Dhabi.

Management is confident that shareholders will approve the deal (97 percent of votes cast so far are in favor) but can't say exactly when that hurdle will be cleared. Even worse where AMD's competitive position is concerned, Intel's new and retrofitted plants will produce a new generation of 32nm chips, while AMD is only now ramping up production of bulkier 45nm chips.

The new Intel chips, codenamed Westmere, can be used in a wide range of electronic devices, from PCs to cell phones and medical devices. The new chips carry more transistors capable of running more processes in background, and are more energy-efficient than older chips.

There's a further irony in all this: all $7 billion of Intel's investment is slated for plants located in the United States, whereas ATIC is spending part of its investment to retrofit an AMD plant in Dresden, Germany. Perhaps AMD can use some of the stimulus package to finance new fabs in the U.S.