Advanced Micro Devices Inc. – maker of chips for mobile entertainment applications, among other products – will transform its manufacturing arm into an independent company financed by investors in Abu Dhabi.
The Foundry Company, the new entity, will serve AMD as well as other “fabless” semiconductor companies with a massive investment from Advanced Technology Investment Co. of Abu Dhabi, the companies said today.
The Foundry will be a U.S.-based, global enterprise with factories in Dresden, Germany and greater Albany, New York.
The move allows AMD to focus its two businesses – chip design and manufacturing – and clean up its balance sheet. The company’s stock has lagged since it purchased ATI Technologies, a graphics chip-maker, in 2006 for $5.4 billion.
AMD’s share price has dropped nearly 65% in the past 12 months, according to Forbes.com, and it has posted seven consecutive quarterly losses. The company has trailed Intel Corp., its chief rival in semiconductors for notebooks and PCs.
Today, the company’s stock jumped nearly 18% on news of the company’s announcement.
The deal announced today calls for Advanced Technology Investment Co. of Abu Dhabi to invest about $2.1 billion and assume about $1.2 billion of AMD’s current debt in the next five years, according to news reports. Another Abu Dhabi-based investment company, Mubadala Development, will increase its stake in the company from 8% to more than 19% with a $314 million investment in AMD.
AMD will own more than 44% of The Foundry, with Advanced Technology Investment Co. owning more than 55%.
AMD wins billion-dollar investment, splits in two
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