Much speculation has surrounded Advanced Micro Devices' manufacturing plans for its upcoming Fusion family of processors and whether these chips could be produced under contract. But a senior executive said on Tuesday that AMD plans to manufacture the first chips itself.

The first Fusion processors will be made at AMD's chip plant in Dresden, Germany, said Rick Bergman, senior vice president and general manager of AMD's Graphics Products Group, during an interview.

"There are some lower-end models that we're considering that we might use the fabless model for," Bergman said, indicating the production of these chips would be outsourced.

Due in late 2009, Fusion chips will combine processor cores, a memory controller and graphics cores on a single piece of silicon. Current AMD processors have the processor cores and memory controller on the same chip. Adding a graphics core to these chips is technically challenging, in part because AMD's existing microprocessors and graphics chips are made using different technology.

AMD's graphics chips are made by Taiwan Semiconductor Manufacturing Co. using a bulk CMOS (complementary metal oxide semiconductor) process, while the processors are made by AMD and Chartered Semiconductor using SOI (silicon-on-insulator) technology.

The Fusion chips will be made using SOI, Bergman said.