AMD & Motorola Dresden Deal Likely >BY Dan Jones.

It seems likely that Motorola Inc will sign a deal with Advanced Micro Devices Inc to take up spare capacity at AMD's $1.2bn plant in Dresden, Germany. A deal would make sense for both companies. AMD needs to recoup some of the money it spent on the state of the art fab and will likely have spare capacity. Motorola needs capacity to manufacture its new G4 chips, the first to use copper technology.

AMD has not discounted the possibility of a deal. However, spokesperson Drew Prairie claimed that the company was not looking for a partner at this point in time. Industry analysts think that an AMD/Motorola hook-up would make perfect sense. Keith Diefendorff, from the Microprocessor Report comments: "It doesn't surprise me that AMD might have some over-capacity in Fab30, at least initially...Motorola needs some capacity, they've said they were looking to outsource more manufacturing. And since AMD and Motorola already have a process development arrangement and were planning to put Motorola's copper process in Fab30 anyway, it seems like an obvious thing to do... they're already working together on 0.18 micron copper technology." Prairie agrees that it would be a simple task for Motorola to use the Dresden plant, saying, "if you were to bring over a Motorola product it would be very easy to transition."

The Dresden plant has been a problem for AMD since its inception, with some in the industry suggesting that chief technology officer, Atiq Raza, left the company because his efforts to sell the Dresden plant were blocked by CEO Jerry Saunders. Indeed, some in the industry suggest that AMD may need to sell the spare capacity at Dresden because it still owes the German government between $70m and $80m marks ($38m-$43m) in loan repayments on the plant, which are due to be repaid soon. AMD had not returned our calls on this matter by press time.