AMD confirms manufacturing spinoff

Chipmaker says it will focus its investment on plants in New York and Germany, as it gets backing from the United Arab Emirates.
Written by Colin Barker, Contributor

AMD is to split off its manufacturing operations through a finance deal with an investment firm from the United Arab Emirates, which will leave AMD with total control of only its design wing.

The chipmaker confirmed on Tuesday that it has signed an agreement with Advanced Technology Investment Company (ATIC) of Abu Dhabi, to form a joint company that will take over the company's manufacturing interests.

In a conference call on Tuesday, AMD outlined the scheme, which will see an eventual investment from ATIC of US$5.7 billion for a 55.6 percent stake in the joint venture, to be called The Foundry Company. The chipmaker will retain the remaining 44.4 percent of the new company. AMD has two major plants: one in Dresden, Germany; and another in New York State.

Work has already begun in New York and, according to AMD, investment there will lead to another 1,400 jobs. There will, however, be "a small number of layoffs" as a result of the investment, according to company chief executive, Dirk Meyer.

The initial investment will be US$2.1 billion, of which US700 million will come from ATIC.

In a statement, IBM welcomed the job creation in New York, a state where IBM itself has considerable investment. The company has a major technology base in nearby Burlington, Vermont.

According to AMD, the Mubadala Development Company will also increase its current investment in the company to 19.3 percent, up from its previous 8.1 percent stake following a deal signed last year.

ATIC and Mubadala are investment firms established by the Abu Dhabi government, where ATIC focuses its investments in the local and global advanced technology sector.

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