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Ailing Chipmaker Divides Itself

AMD [AMD] has been struggling to hang with Intel [INTC] for a while now, but a string of buggy chips and unimpressive offerings have made the company nearly moot in the last few years. Now AMD has announced that it will be splitting itself into two separate companies: one that can architect processors, and another that actually manufactures them. That makes Intel the last standing corporation with both in-house design and production capabilities.

The idea behind the secession of the manufacturing portion of the company — which will now be called The Foundry Company, at least temporarily — is to allow other customers to come in and use AMD's production facilities, earning them a little more money to throw around. Building new factories for each successive generation of processors is an expensive proposition, so a boost in revenue will be a welcome change. The Foundry Company will continue ownership of AMD to the tune of 44%.

Some tech pundits have expressed concern that with AMD chopped up and struggling, Intel will solidify its position as the number one chipmaker and grow complacent without real competition. Were that to be the case, consumers would suffer, but AMD might gain back a window of competition through which to re-ascend to its position of some years ago, neck-and-neck with the popular Core 2 Duo maker; only time will tell.