Advanced Micro Devices Inc. on Tuesday announced it has begun shipping production processors from its new 300 mm wafer fabrication plant in Dresden, Germany, which will eventually enable the company to double its production capacity over the next three years.

"We will have the ability to provide the right capacity at the right time based on our customers' needs," said Hans Deppe, VP and general manager of the AMD facility in Dresden, during a teleconference Tuesday.

AMD is now manufacturing Athlon 64 and Sempron microprocessors at the new Fab 36 using a 90-nanometer production process. AMD will increase production at the plant to about 13,000 wafers a month later this year, and to 20,000 wafers a month in 2007, said Tom Sonderman, director of automated precision manufacturing technology for AMD.

In addition, AMD has increased production at its existing 200 mm Fab 30 in Dresden from 20,000 wafers to 30,000 wafers a month. AMD also has an agreement with chip foundry Chartered Semiconductor for "flex" production capacity that can also be tapped to meet increased customer demand.

Bringing Fab 36 into production provides AMD with the ability to more effectively compete with Intel in terms of production capability as well as cost. AMD is investing about $2.5 billion in the Fab 36.

Intel already produces 300 mm wafers in multiple fabs. A 300 mm wafer lets companies pack more chips on a single wafer and can provide an even greater production increase as they transition to smaller chip sizes.

Intel is already in volume production of processors at 65 nanometers and earlier this year demonstrated a 45-nanometer production capability it says it will bring on line in 2007. Initial production at Fab 36 for AMD is being completed in a 90-nanometer production process, with the first production using a 65-nanometer process scheduled for the second half of this year, and "a substantial conversion to 65-nanometer production expected by midyear 2007," Sonderman said.

"We have now gone from only one 200 mm fab at the end of last year to having two fabs and flex capacity," Sonderman said. "We are well on our way to our goal of doubling capacity in the 2008 timeframe."