How Stable Is Demand for Your Product?
If you make toothpaste, people will always need a reasonably predictable amount of it, so opening a gypsum quarry to ensure you always have gypsum with needed qualities in needed amounts makes sense, as does developing appropriate marketing and distribution capabilities. And yes gypsum is an ingredient in toothpaste.
If you make drywall and do the same thing, a down-turn in the new housing market, which is very sensitive to the general economy, means you aren’t just stuck laying off people and selling off equipment at the factory, you have a big expensive gypsum quarry full of even more expensive processing equipment, warehouses full of gypsum and drywall with trucks parked outside, and offices full of sales people that are down to cold calling. Do you sell all this stuff when the gypsum market is down? Keep it but lay everyone off and try to keep up on the leases? Or keep everyone working and hope you don’t go bankrupt sitting on a mountain of gypsum three months before people need drywall again.
AMD is in kind of a tough spot here. Semiconductor manufacturing is reasonably stable (fewer people run out for a new laptop in a bad economy, but computing is so pervasive that you can almost always find customers) but owning their own fabs means that if demand for their products isn’t keeping up, they have very expensive labor and equipment sitting idle. If their products do really well, they might run out of the capacity to make enough of them.
Adding semiconductor manufacturing capacity costs hundreds of millions if not over a billion dollars, and takes at least a year (see the section on needing a lot of money, below). As AMD gains or looses market share based on its head to head competition with Intel, they can run into these problems.