Dirk Meyer, chief executive of Advanced Micro Devices, said Friday the chipmaker plans to "ramp up" production of next-generation 32-nanometer processors in the middle of next year with volume production starting in the fourth quarter.

Meyer discussed the production plans during a 30-minute interview with InformationWeek that touched upon a variety of subjects. In rolling out the smaller, more powerful processors next year, AMD will be months behind Intel, which plans to begin production of 32-nm products in the fourth quarter of this year.

The number refers to the size of the circuitry on the chip. The latest processors shipping today from Intel and AMD use 45-nm components. Reducing the size of the circuitry leads to more powerful processors without increasing energy consumption. A nanometer is a billionth of a meter.

AMD typically follows the far larger Intel by six to 12 months in shipping next-generation products, so the timetable for its 32-nm chips is not out of the ordinary. What is different this time around is that the new processors will be designed, but not built, by AMD.

On March 2, AMD closes its deal with Advanced Technology Investment Co., formed by the Abu Dhabi government, to spin off the chipmaker's manufacturing operations into a joint company, temporarily called the Foundry Co. The deal is expected to move $1.1 billion in debt, most of it associated with AMD's Dresden, Germany, manufacturing operation, off of AMD's books, Meyer said. In addition, the company gets a cash infusion from its partner of about $800 million, and AMD will no longer have to spend $1 billion to $2 billion a year on capital investments in fabrication plants.

All of this is key to AMD's strategy toward reversing a string of quarterly losses that have amounted to several billions of dollars. In the fourth quarter of last year alone, AMD reported a loss of $1.4 billion.

Meyer is confident that the Foundry Co. will dedicate the needed resources to AMD, which will be its largest customer and will own more than a 34% share. The CEO points out that AMD's graphics chips that stem from the 2006 acquisition of ATI Technologies are made by Taiwan Semiconductor Manufacturing.

"We've been actually impressed to see the quality and depth of the relationship a fabless company can have with its partners," Meyer said.