bit-tech.net

AMD announces manufacturing spin off

AMD announces manufacturing spin off

AMD announced its plans to spin off its foundry business into a separate company today with the help of Abu Dhabi based investor ATIC. A new fab will be built in Upstate New York.

During a conference call this afternoon, AMD confirmed the rumours that have been circulating about its plans to spin off its foundry business into a separate company.

There have been rumours of AMD considering an asset smart strategy for some time now and today it has announced a partnership with Advanced Technology Investment Company (ATIC) of Abu Dhabi.

The processing powerhouse will sell a 55.6 percent stake of its manufacturing business to ATIC, who will form a new entity called The Foundry Company for the time being - the corporate identity of the new company will not be revealed until the deal closes at the beginning of 2009, providing everything goes to plan.

ATIC will pay AMD $700 million for its stake in the new company and will invest several billion dollars into the business in the mid-term future. ATIC said it will also invest $1.4 billion in a new foundry, Fab 4X, in Upstate New York next year and will commit at least $3.6 billion (and up to $6 billion) in additional funds over the next five years.

As a result of the agreement, $1.2 to $1.3 billion of existing AMD debt will be absorbed by The Foundry Company, while AMD will retain the remainder of the new business, holding a 44.4 percent stake. It will also be given equal voting rights to ATIC on The Foundry Company's board.

Doug Grose, AMD's current senior vice president of manufacturing, will become the CEO of the new company, while former AMD CEO Hector Ruiz will step down from his role at AMD and become chairman of the board at The Foundry Company.

AMD will hand over control of its Dresden fabs and will have an "exclusive supply agreement with limited exceptions to manufacture AMD processors and to manufacture, where competitive, certain percentages of other AMD semiconductor products," according to a statement.

On a related note, Mubadala Development Company has announced that it will significantly increase its stake in AMD. The Abu Dhabi-based investor bought an eight percent stake in AMD last November for $622 million and will now inject another $314 million into the company for a 19.3 percent stake and one seat on the board of directors.

What do you think to AMD's decision to spin off the manufacturing portion of the company? Let us know your thoughts in the forums.

11 Comments

Discuss in the forums Reply
leviathan18 7th October 2008, 17:51 Quote
smart move, now they will have the capacity to supply the demand, and probably now they will have the money to design a decent cpu
DougEdey 7th October 2008, 17:53 Quote
The Foundry Company sounds cool, I reckon they should keep it!
n3mo 7th October 2008, 17:57 Quote
Good for AMD. Off-sourcing chip production and some money injections here and there might give them a much needed kick towards competing with Intel... which can only be good for everyone.
devdevil85 7th October 2008, 18:44 Quote
Quote:
Originally Posted by n3mo
Good for AMD. Off-sourcing chip production and some money injections here and there might give them a much needed kick towards competing with Intel... which can only be good for everyone.
I agree completely. I'll be in the market soon for a new PC, let's hope AMD can produce something better than Intel because I hate Intel.
Tim S 7th October 2008, 19:44 Quote
It is a smart, but calculated move IMO. Hopefully with AMD's stake in the new company, they'll still technically be co-developing new manufacturing processes, because I would hate to see AMD no longer be competitive due to the fact their manufacturing processes aren't directly aligned with their CPU designs.

The only way we're going to know what will happen is to sit and wait... it could bring AMD right back into the game, or it could take them out of it completely in the CPU business. The GPU business isn't so much of an issue because both ATI and Nvidia have run fabless for years (and will continue to do so).
Jojii 8th October 2008, 00:17 Quote
At least for the AMD CPU buisness they have the knowledge from the GPU guys on how to do project management with a fabless model. Hopefully they will allow them to concentrate on setting design goals of where they want to take thier chips and not worry if they can manufacture it. I think this will alllow for some innovation instead of design constraints due to fab tech.
1ad7 8th October 2008, 03:33 Quote
Very good news, although its not the ideal situation if amd can work it right it could save the ship. Although hector still being around kinda scares me, 3rd chance? come on
p3n 8th October 2008, 08:59 Quote
Looks like Orange County Choppers new digs!
Xir 8th October 2008, 10:09 Quote
Quote:
Originally Posted by Jojii
and not worry if they can manufacture it.

That's exactly the problem, what good is a good design if they cannot manufacture it?
The dresden fabs have been producing the bleeding edge of what they can do. Beeing technologically ahead of any foundry.
...now if some cost cutting occurs (as a financial investor almost certainly will) they may not be able to produce their designs.

AMD's own Fabs are (technologically speaking) at least a year ahead of the usual foundries. (Though a bit behind Intel)

Xir
Kúsař 8th October 2008, 10:20 Quote
Quote:
Originally Posted by Tim S
It is a smart, but calculated move IMO. Hopefully with AMD's stake in the new company, they'll still technically be co-developing new manufacturing processes, because I would hate to see AMD no longer be competitive due to the fact their manufacturing processes aren't directly aligned with their CPU designs.

"The Foundry Company will join the IBM joint development alliance for both silicon-on-insulator (SOI) and bulk silicon through the 22nm generation. The alliance consists of a group of leading semiconductor companies collaborating on next generation silicon technologies."
(source: http://www.amd.com/gb-uk/Corporate/VirtualPressRoom/0,,51_104_543~128482,00.html)

And I hope their research in litography will prove useful in next few years
Amon 9th October 2008, 04:03 Quote
This is going to be interesting for Deneb.
Log in

You are not logged in, please login with your forum account below. If you don't already have an account please register to start contributing.



Discuss in the forums