Analyst: two weeks to go until AMD reveals fab spin-off

— 9:58 AM on September 5, 2008

AMD has been talking about its "asset smart" plan for months now, but aside from a few vague hints and progress reports, it's stayed mum on what the project actually entails. Now, the Austin-American Statesman has learned from an analyst that AMD executives may finally find their tongues later this month.

Citing "computer industry sources," John Lau of Wall Street securities firm Jefferies & Co. says details of the strategy will come to light in two weeks. Lau claims AMD will spin off its two fabrication plants in Dresden, Germany into a new company, which will produce chips for both the fabless AMD and third parties. Allegedly, a Middle-Eastern investment group might "acquire a large position in the new foundry and fund its purchase with cash."

This isn't the first time the fab spin-off rumor has gone around, but it still makes sense. Without having to spend billions on manufacturing, AMD could vastly reduce its expenses and become more profitable. The spun-off fab company could recoup investments by making chips for other companies. Lau's mention of investment firms in the Middle East sounds plausible, too, because an Abu Dhabi company already purchased an 8.1% stake in AMD last year.

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