Third Fab's a Charm for AMD

Updated from 6:21 p.m. EDT

With its computer microprocessors continuing to gain market share, Advanced Micro Devices(AMD Quote) is expected to detail plans to build a third chip-manufacturing facility Monday.

The new facility would be located in Dresden, Germany, alongside AMD's other two fabs, and could boost the company's wafer production by up to 50%, according to some estimates.

An AMD spokesman said he couldn't confirm any specific rumors, but said AMD will be holding a press conference in Dresden on Monday morning, and that an announcement will be made.

According to Dave Cavanaugh, a semiconductor-equipment analyst at Semico Reseach, several industry insiders have informed him that AMD will announce plans next week to erect a new chip-fabrication facility in Dresden.

Cavanaugh said that the timing would fit in with previous comments by AMD CEO Hector Ruiz, who has said the company would provide details about additional manufacturing plans in mid-2006.

During the past year, AMD has been gaining ground on Intel(INTC Quote), the world's dominant supplier of microprocessors, thanks to the popularity of its dual-core processors for servers and desktop PCs.

Last week, AMD's stock received a 10% pop after Dell(DELL Quote), the world's No.1 PC maker and a longtime Intel-only vendor, announced that it would begin using AMD Opteron processors in some of its servers.

AMD has said it intends to grab 25% to 30% of the overall PC market share in the next couple of years, up from its current share, which is between 17% and 20%, depending on the estimates.

To meet the projected demand, AMD needs to ensure that it has sufficient manufacturing capacity.

In April, AMD announced that it had begun shipping production chips from Fab36, its second manufacturing facility in Dresden. And the company has inked a deal with contract chip manufacturer Chartered Semiconductor(CHRT Quote), providing it with extra manufacturing capacity.