AMD to split, gets Abu Dhabi investment
AMD, the number two US computer chip maker, announced it was splitting into two companies after receiving a huge infusion of capital from two Abu Dhabi investment firms.
By Agencies |
NEW YORK: Advanced Micro Devices (AMD), the number two US computer chip maker, announced on Tuesday it was splitting into two companies after receiving a huge infusion of capital from two Abu Dhabi investment firms.
AMD, which has been struggling to keep up with market leader Intel Corp., said in a statement that the move would result in one company that designs semiconductors and another which builds them. Advanced Technology Investment Co. (ATIC) of Abu Dhabi will be the major stakeholder in the new manufacturing firm, provisionally to be called "The Foundry Company," with a 55.6 percent share of the venture.
AMD, based in Sunnyvale, California, will own the rest. ATIC will invest 2.1 billion dollars to purchase its stake in The Foundry Company, of which it will invest 1.4 billion directly in the new entity, the statement said.
The remainder is to be paid to AMD to purchase additional shares in The Foundry Company. The Foundry Company will also assume 1.2 billion dollars of AMD's existing debt.
ATIC has also committed additional equity funding to The Foundry Company of a minimum of 3.6 billion dollars and up to six billion dollars over the next five years to fund expansion of AMD's chip-making capacity.
The funds will be used to expand capacity at AMD's chip-making plants in Dresden, Germany, and to build a new state-of-the-art manufacturing facility near Albany, New York, creating some 1,400 jobs.
Simultaneously, another Abu Dhabi investment firm, the Mubadala Development Co. will increase its investment in AMD to 19.3 percent from the current 8.1 percent through the purchase of shares and warrants worth 314 million dollars.
ADVERTISEMENT
"As a result of the transactions, AMD will strengthen its financial position and focus on the design and development of innovative computing and graphics solutions," the company said. Dirk Meyer, president and chief executive officer of AMD, said the deals marked a "landmark day for AMD, creating a financially stronger company with a tightened focus. "With The Foundry Company, AMD has developed an innovative way to focus our efforts on design while maintaining access to the leading-edge manufacturing technologies that our business needs," he said.
"Today's announcement significantly reshapes the global semiconductor industry," said ATIC chairman Waleed al-Mokarrab, adding that The Foundry Company would "become a clear leader in global semiconductor manufacturing." ATIC is an investment company formed by the government of Abu Dhabi to invest in advanced technology.
The deal, which the parties expect to close in early 2009, remains subject to the approval of shareholders and the Committee on Foreign Investment in the United States, which needs to green light any agreement with national security implications.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
