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.
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.
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Discuss in the forums ReplyThe 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).
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
"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