Features - Financial Plays Of The Week:

AMD TO UNVEIL NEW FUJITSU VENTURE

Advanced Micro Devices Inc is expected to unveil a new joint venture with Japanese memory chip maker Fujitsu Ltd that would dramatically change their current partnership, according to a published report.

Analysts suggest the predicted move is a precursor to AMD splitting in two, with management of its core microprocessor business based in Austin, Texas and some of the key memory business executives based at its headquarters in Sunnyvale, California.

AMD, the No. 2 chipmaker behind Intel Corp, is expected to own 60 percent of the venture, to Fujitsu's 40 percent stake, the San Jose Mercury News reported, citing industry sources. Each company currently owns a 50 percent share in the existing partnership, dubbed Fujitsu-AMD Semiconductor Ltd.

AMD plans to host a press conference Monday afternoon to announce a "strategic corporate initiative." Representatives for the company declined to comment on what the announcement would be or to comment on the Fujitsu report.

AMD and Fujitsu have long been partners, jointly developing flash memory chips that are used in cell phones and many other handheld devices. But they also had to compete against each other in Europe selling their jointly developed chips.

The new company, which will include all of both companies' flash memory operations, will be headed by Bertrand Cambou, who was recently promoted to senior vice president at AMD, the newspaper said, adding that the company would have one combined sales force.

Tim Mahon, an analyst at Credit Suisse First Boston, on March 19 said a spinoff was "imminent" and upgraded AMD's stock to "neutral" from "underperform." He said advantages gained would be increased revenue from flash memory and more control over the operations and investments of the flash business.

Nearly one-third of AMD's revenue comes from flash memory sales. The other two-thirds largely derive from sales of microprocessors.

AMD Moving To Split

AMD has been moving for a few years to separate into two companies: microprocessor and flash, as it did with its programmable logic device business, which it eventually spun off, according to Kevin Krewell, a senior analyst at the Microprocessor Report.

"AMD is whittling its way down to being basically just a processor company," he said. Focusing on processors will help AMD better compete with Intel, the world's leader in selling processors that serve as the brains of computers.

Combining AMD and Fujitsu's flash sales and marketing efforts will put an end to the occasional competition they posed each other in certain markets, and will create a stronger flash rival to Intel, analysts said.

"Each looks like a smaller player when you look at the rankings versus Intel," said Nathan Brookwood of Insight 64.

Intel and AMD are the top two companies providing flash memory used in cell phones and PCs. Fujitsu is ranked No. 5, said Jim Handy of Semico Research.

AMD and Fujitsu both saw sales decline last year while Intel's rose slightly. "It looks like something they've got ahead of them is gaining back market share," Handy said.

Shares of AMD were up about 1 percent to $6.16 on the New York Stock Exchange and Intel was down nearly 4 percent at $16.55 on the Nasdaq.