Industry Expert Blogs

AMD is going to try a new business model that if successful could be the start of a new trend. Over the past decade we have had a number of IP companies emerge. These companies create high quality blocks that can be integrated into other people’s designs. A fabless company buys a number of these building blocks, integrates them together, usually with some of their own IP, and builds a product that they believe will be successful. The integration company basically takes on the product risk. The IP was paid for in terms of initial licenses although, in most cases, the IP company wants them to be successful so that they get a royalty on the finished, and shipped products.

The fabless company has reduced their capital outlay by having manufacturing performed by another company and reduced the size of their engineering team by buying a majority of the commodity portions of the design. They are left with designing the high-value portion, integrating the system together and going through the back end of the development process. But what if additional parts of that flow can also be taken out of the risk equation. That is what AMD believes they can do.