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.
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