Faced with rising manufacturing costs and growing demand for contract semiconductor manufacturing, AMD has decided to spin off its fabrication business into a separate company. In doing so, AMD has teamed up with the Advanced Technology Investment Company (ATIC) of Abu Dhabi, which will take a 55.6% stake in the new manufacturing entity and contribute a few billion dollars over the coming years. AMD will take a 44.4% stake but get equal voting rights with ATIC.
The new manufacturing business doesn't have a final name yet, so AMD is calling it "The Foundry Company" for now. Current AMD Manufacturing Senior VP Doug Grose will become CEO of the new company, while former AMD CEO and current AMD Chairman Hector Ruiz will become its Chairman. The Foundry Company will take control of AMD's fabs in Dresden, Germany, and it will start building a new facility called Fab 4X in upstate New York next year. Despite the ATIC investment, The Foundry Company will remain headquartered in Silicon Valley, with R&D and manufacturing teams in Austin, Dresden, and New York. Abu Dhabi could eventually play host to a Foundry Company fab if such an endeavor is "commercially justifiable," though.
Since AMD relies on its current fabs to make most of its processors, The Foundry Company will enter an "exclusive supply agreement with limited exceptions to manufacture AMD processors and to manufacture, where competitive, certain percentages of other AMD semiconductor products." Also, because few third parties use silicon-on-insulator technology, The Foundry Company plans to introduce a bulk silicon manufacturing process at the 32nm process node. That move should ensure the new company gets customers other than AMD, and it could also help it secure some of AMD's GPU orders. Right now, Taiwanese foundries make all AMD graphics processors using bulk silicon.
On the financial side of things, ATIC will pay AMD $700 million for its stake in The Foundry Company, and it will absorb $1.2-1.3 billion of existing AMD debt. The firm will invest another $1.4 billion in the new foundry, as well, and it will commit "a minimum of $3.6 billion and up to $6.0 billion in additional funds over the next five years." That money will go toward expanding capacity in Dresden and building Fab 4X in New York.
In a related but separate move, the Abu Dhabi-based Mubadala Development Company will more than double its stake in AMD. Mubadala bought an 8% stake for $622 million in November of last year, and it will now cough up an extra $314 million for a 19.3% stake and one seat on the AMD board. Mubadala CEO Khaldoon Al Mubarak comments that the investment represents a "a strong vote of confidence in AMD's Asset Smart business strategy, evolved leadership team, and best-in-class technology." (If you haven't guessed by now, this fab split-up is AMD's asset-smart strategy.)
The transaction between AMD and ATIC should close "at the beginning of 2009," at which point The Foundry Company will reveal "its permanent corporate name and identity." In the meantime, you can visit AMD's New Global Foundry page to learn more.
|Telecom industry seeks to stay the FCC's net neutrality rules||36|
|The curtain falls on Windows Media Center||58|
|The PC Gaming Show provides a dedicated soapbox at E3||8|
|DX12 demo will make you squint to see what's better||40|
|Lenovo's lightweight LaVie Z ultrabooks start selling stateside||31|
|MSI refreshes Socket FM2+ mobos for Godavari APUs||13|
|HP press release names next-gen Radeons||5|
|Rise of Incarnates promises better fighting than Mayweather-Pacquiao||5|