‘Asset smart’ unfurls, AMD spins off foundry business

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.

Left: AMD’s fabs in Dresden. Right: A 3D render of Fab 4X in New York. Source: AMD.

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.

Comments closed
    • Wintermane
    • 11 years ago

    Um folks.. because of the way the licencing deal between intel and amd works amd has just blown both its own feet off.

    It CANT have an outside contractor make more then 20% of its cpu chips and now it wont be making any….

      • MadManOriginal
      • 11 years ago

      If AMD missed that part of the licensing and your conclusion is accurate in that there aren’t any other wierd terms or loopholes that’s a serious problem.

      • Forge
      • 11 years ago

      Clearly you are more observant than ALL of the lawyers at AMD put together.

      Since you are so bright, what do you recommend they do?

        • Wintermane
        • 11 years ago

        The foundry company will have to try and come to a seperate agreement with intel on cross liciencing deals.. Its intels ip and thierfore ONLY INTEL and not the pope or a supreme court judge or the reanimated corpse of charly chaplan can “sell” that ip to the new company. It is like if I rented a car and then sold it…. amd and intel are both renting ip from each other they dont OWN it.

    • robspierre6
    • 11 years ago

    AMD didn’t sell it’s 2 fabs in Dresden.It just decided to transform them into a new company and share the property of this new company with ATIC.
    AMD still has about 45% of the mew foundary with full control on the fabs.Actually ATIC is going upgrading the 2 fabs,and build a new one in NY.c.

    AMD stil have full control on all it’s three fabs,the only thing that happened is that AMD will share the property of the two fabs in Dresden with a foreign company that belongs to the arabian prince Hamad Bin Jasem.

    This is the best thing that could ever happen to AMD.

    • bogbox
    • 11 years ago

    The Arabs did a very good business buy *[

      • grantmeaname
      • 11 years ago

      why would somebody from Indiana buy a fab? Besides, didn’t the ‘arebs’ give AMD $1B in cash in addition to paying off $1.6B in debt?

        • SubSeven
        • 11 years ago

        Thank God…. i was starting to think that people must have forgotten how to read.

        Oh and by the way, don’t forget the future sponsoring of new FAB plants to be built as well. 🙂

        • bogbox
        • 11 years ago

        the fab are constantly changing technology so they coud change the fab to produce any tip of chip ,from graphics processors to ballistic rocket guided chip ,or car processor.
        1: All the fabs are now belonging to “The Foundry Company” for which arebs paid 1.6 b for 54% (technically speaking arebs own all the Amd fabs )
        2 the debt comes with the fabs
        3 upgrading there “new” fabs is normal, to produce any purpose cpus.(and profit )

    • pluscard
    • 11 years ago

    Intel will not be pleased.

    They’ve worked for years by both legal and illegal measures to limit AMD’s access to capital, and also to limit AMD’s marketshare.

    The new AMD represents a serious challenge to both Nvidia and Intel.

    Plus

      • SecretMaster
      • 11 years ago

      Welcome back there buddy.

      • ClickClick5
      • 11 years ago

      I see AMD, two tech gens from now, taking back some ground like they did with the x2. Maybe not AMD’s next architecture, but the next architecture.

      Plus I wonder if AMD and Intel are working together like Nvidia and ATI were found to be.

      Just curious.

    • Wintermane
    • 11 years ago

    As I said after they bought ati they had to sooner or later spin off the fabs. They would have gotten more money if they had done so sooner tho.

    Fact is with the econ the way it is and amd still in deep debt even after this its still likely amd will fail.

      • bfellow
      • 11 years ago

      They bumped up their total debt to $7.6 billion but that was going to happen with long-term debts being created with a new company.

    • thermistor
    • 11 years ago

    #9…Michigan not a good place to locate because of bad workers? I’m sorry, I’m going to rebuke your claim that somehow being a part of a union makes someone a poor worker. Everybody has beefs with unions, even those people who are in them…but that doesn’t make union members poor laborers – far from it. Arguably overpaid, but not poor workers.

    Long live the rust belt!!

      • data8504
      • 11 years ago

      Michigan’s corporate tax situation is horrible.

      • Suspenders
      • 11 years ago

      I’d have to agree. Don’t they have a union in Germany?

        • ludi
        • 11 years ago

        German industrial unions have a much better history of working cooperatively with a smart, forward-looking management. US automotive unions have benefited from neither.

      • green
      • 11 years ago

      unions don’t mean poor labourers
      they mean expensive labourers
      expensive labourers are unattractive to business

    • AMDisDEC
    • 11 years ago

    Hahaha, I give the remaining AMD Design Center about 2-3 years before they sell off to Private equity liquidation leaving the Foundry as the last physical remains of what was, AMD.

    The foundry cost was only one of many AMD problems. $700M for the foundries represents a Humongous financial loss of billions of dollars of previous investment. Even without the foundries it will be eaten up in no time flat.

    Great deal for the Arabs who’ve caught AMD comatose and bending over a barrel, but ultimately spells the end of what we used to know as the company formerly known as, AMD.
    When Private Equity breaks up the design group I’m wondering how the Arabs will get around the regs to purchase them.

      • indeego
      • 11 years ago

      The arabs have more cash than they know what to do with. This is a bet that is easily worth taking if it pays offg{<.<}g

        • AMDisDEC
        • 11 years ago

        Yes, the Arabs have boatloads of loot. Unfortunately, this does not translate into experience running fast paced, high technology semiconductor fabs.
        Eventually, I expect them to turn to the aid of an Asian competitor.

      • WaltC
      • 11 years ago

      /[

        • AMDisDEC
        • 11 years ago

        AMD has been dead for a while now.
        What you are seeing is the corpse settling down and extending it’s imminent dismiss by shedding half of it’s vital organs.

        Problem 1: Hector Ruiz is chairman of the foundry, no doubt, advising the new UAE owners. Anything Hector trouches turns to rust. Ask Motorola, and now AMD.

        Problem 2: AMD lost a very significant investment with this deal. While it enables them to continue operations it still does not hide the fact it represents the loss of tens of billion dollars of investment for AMD. The remaining design groups will burn thru $700M in lawyers fees, executive compensation and overhead in no time.

        Problem 3: ALL of AMD’s current misfortunes are due to their extremely poor management. The same people are involved.

        Problem 4: Intel is accelerating their frontal attack and have AMD flanked on all sides.
        AMD no longer has any value left in their CPU line other then price.

        I’m wondering which Asian (perhaps Israeli) company will step forward first and purchase all of AMD’s processor IP. That is the likely next step.

          • MadManOriginal
          • 11 years ago

          Just to nitpick, AMDs price advantage is in the platform (mobo+CPU) not so much the CPU itself any more.

          One problematic thing with any merger wrt the IP is that AMDs licenses with Intel don’t carry over to a new company so it would have to be some kind of reverse merger or a wholesale buyout that doesn’t change the company much.

            • AMDisDEC
            • 11 years ago

            Sorry, but AMD has no advantage over Intel in the bundled desktop or server CPU+MB, or CPU+system areas.
            Mainly because Intel designs, fabricates, and markets their own motherboards, OEM desktop and server systems, whereas, AMD does not.
            Intel is so effective and makes so much money off of these sales that their motherboard, desktop and server customers are not too keen about their CPU supplier also being their competitor in the systems area.

            In the bundled area, AMD is dependend on their motherboard partners (ASUS, MSI, SUN) to create specs, design, fab systems, and set pricing.
            They refuse to imitate Intel in this area, and is somewhat responsible for their current pending dismiss.

            • StashTheVampede
            • 11 years ago

            Wait, wut? Intel may make reference motherboards for notebook, desktop and server designs, there aren’t NEARLY that many using complete motherboards.

            Most OEMs get a motherboard maker to use Intel chipsets (notebook, desktop or server, doesn’t matter) for Intel chips (a perfect fit, naturally). If Intel made so many board and was so widely adopted why are there a dozen motherboard makers in the market?

            AMD is in a similar boat: they *need* motherboard makers to buy their chipsets to supply OEMs the complete solution.

            It all comes down to overall cost. 99% of the users do NOT care if its Intel or AMD under the hood, they simply want to pay $X for a new laptop. OEMs understand this and want to sell that computer for the least amount of money. Buying from AMD or Intel is the same (nearly): chip, chipset, gpu.

            There is still a third party market for things like wifi, server chipset, etc, but they are TINY compared to the tier1 makers

            • AMDisDEC
            • 11 years ago

            No, Intel has for the last 10-12 years, make their oem reference boards, and also design/manufacture a complete line of OEM bare bones or complete system for integrators.
            Intel partners and OEMs hate this aspect of Intel.
            I think it’s the smart thing to do. that is much more profit in systems then chips.

            • MadManOriginal
            • 11 years ago

            Ok, I was looking at it from a perspective that’s useful to individual buyers who read this site not the perspective of corporate buyers. Intel chipset mobos tend to be more expensive and I haven’t seen this change for a few years, and that is not just for enthusiast-type boards either.

            AMD has come a ways since buying ATi in the chipset area at least, prior to the purchase they haven’t any of their own chipsets (for a long time) I think?

            • AMDisDEC
            • 11 years ago

            Expensive is relative.
            Intel’s OEM platforms are generally less expensive then their competitors.

            • MadManOriginal
            • 11 years ago

            That’s nice. Once again I’m not talking about OEM platforms that likely include volume discounts as well but rather ones that individuals such as the readers of this site are likely to purchase for themselves or others. I hope I don’t have to repeat that again.

            • AMDisDEC
            • 11 years ago

            Well, off-the-shelf low end boards to which you are referring consist of 97-99% reference design, with 1-3% company differentiated design.

            AMD only designs a few cheap low end references, and 1 or 2 high end, non-production ready systems for partners product development.

            Intel has several references for, everything. Intel beats AMD 100:1 here also, and as I previously stated, one of the reasons Intel always stomps AMD in value-added competition.

            • MadManOriginal
            • 11 years ago

            Looks like repeating is called for! I don’t care about made-up percentage guesses regarding the irrelevant point of whether AMD, Intel, or the board partner designs the board. I was solely talking about total cost (CPU+mobo, all other parts being the same) and some vague buzzword reference to ‘value added competition’ is meaningless when I go to price CPU+mobo. I’m not talking about corporate buyers. I’m not talking about ‘value added competition.’ I’m not talking about support or anything else. I’m purely talking about TOTAL PRICE as a reply to your statement that AMD no longer competes even in that aspect when clearly it does.

            Just go to Newegg and compare 780G to G45 motherboard prices instead of making up percentages and using buzzword phrases, it’s really not that hard. Anyone else want to try with this bonehead who can’t do a simple price comparison?

            • AMDisDEC
            • 11 years ago

            Instead of AMD focusing on broke low end hobbist, wasting their time with junk low end, go nowhere platforms like , Spider. They should have focused on what Intel focused on, which is, customers with more then $40 in their pockets.
            If AMD relies on cheap-skates like you, they’ll end up having to sell their fabs….oh wait.

            • MadManOriginal
            • 11 years ago

            I don’t run an AMD system myself atm but I’ve built a few with integrated AMD boards over the last year, 680G made an AMD integrated graphics system a lot more palatable than the previous NV options, for the internet/email/basic use crowd for the simple reason that paying more for useless performance was silly. There’s a difference between cheap (buying crappy stuff) and not wasting money.

            Now if you want to talk about AMDs overall product lineup that’s fine and it’s a different discussion but you are wrong that AMD doesn’t compete on the low-end pricewise which is what you said and what I refuted, it would be nice if you could outright admit the error but you dodged answering it so close enough. 😉 And they did maintain themselves for a long time that way before K7.

            • Forge
            • 11 years ago

            AMD never really made many chipsets. Back in the K6 days they licensed a *VIA* design and called it AMD 640, then they made Irongate (751) for K7 with it’s horrible busted AGP, then the rather decent 760 chipsets. The 761 was single K7, DDR, and unremarkable, but the AMD-762MP and 762MPX were almost great and great respectively.

            The Opteron chipsets were really promising. AMD-8131 and 8132 gave PCI-X and PCI-X 2.0 quite competently, AMD-8151 did AGP 3.0 (8X) without major bugs. AMD-8111 was a very competent southbridge.

            Unfortunately AMD failed to develop them beyond launch and let Serverworks/Nvidia/anyone who wanted take over the Opteron chipset market.

            For a company that wants to provide ‘complete solutions’ they spent a VERY long time running away from that part of things, often at full tilt.

      • ludi
      • 11 years ago

      Ashok? Ashok Kumar, is that you?

        • AMDisDEC
        • 11 years ago

        I’m thinking either Samsung, Sony, or maybe Apple will end up purchasing AMD’s Processor IP.

    • Willard
    • 11 years ago

    I just cannot figure out the headline.

      • ludi
      • 11 years ago

      For several months, “Asset Smart” has been AMD’s codeword for “we’re going to spin off the fab operations, but we’re not officially admitting it yet.”

        • Willard
        • 11 years ago

        Thank you.

        • shank15217
        • 11 years ago

        Yea so whats your point? Did you really know what they were going to do until today?

          • shank15217
          • 11 years ago

          Im glad the Arabs are finally dabbling into high tech industries, cant live off oil forever.

          • ludi
          • 11 years ago

          No, I just fell off the applecart yesterday. I hadn’t a clue.

          🙄

          edit: fixed blxasteda toypograhpicla erorrs.

    • ludi
    • 11 years ago

    Ruizputin is back, eh?

    Best of luck with that fab company.

    • Price0331
    • 11 years ago

    Sweet, im currently in college to major in computer engineering and maybe a minor in electrical. Once this AMD fab X4 is completed, maybe I can land a engineering job there. 😀

      • ludi
      • 11 years ago

      Most fab work is technical, not engineering, and invovles shift rotations.

      If you want to be working an 8-5 job on the process engineering side, you need to be focusing on materials science and semiconductor physics. Start poking around in any relevant electives if you can, and if you like what you see, consider a double major (even if it takes five years to finish).

    • Bauxite
    • 11 years ago

    If AMD goes sour, I hope the jeering intel fanboys enjoy getting the overpriced uninspired crap that will pour out for quite a few development cycles after the next. (and the general stagnation of the computer market that results)

    The insane cost to even enter the cpu market means they could twiddle their thumbs for 10+ years while padding their coffers and nobody else will do a damned thing. (especially if the economy keeps flushing, no one will take any risks)

    • packfan_dave
    • 11 years ago

    How does this affect the Intel-AMD cross-licensing agreements? I read somewhere that most of them had clauses that allowed Intel to void them if AMD was sold; is spinning off the foundries close enough to qualify?

      • WaltC
      • 11 years ago

      No. AMD still owns >80% of AMD. They simply transferred the FABs from the old AMD into a new company they formed with ATIC, called at the moment “The Foundry Company.”

      AMD has not been sold, but AMD has decided to share ownership of some of its assets in return for a huge investment from ATIC. AMD retains controlling interest of > 80% in AMD and a ~45% stake in the The Foundry Company, and both companies remain under AMD management. Instead of being a cash-strapped single company, AMD is now two companies and flush with cash.

    • AvKn
    • 11 years ago

    What about “real men have fabs” now?

      • Flying Fox
      • 11 years ago

      They can continue pretending to be real men and take the company down. Survival trumps everything now.

        • WaltC
        • 11 years ago

        Well, they are retaining 45% or so ownership in their FABs, as well as equal voting rights and they are going to continue to manage their FABs, so I guess they’re still “real men”–only with a lot more money these days…;)

          • h22chen
          • 11 years ago

          Wouldn’t that count as half-a-man?

    • PRIME1
    • 11 years ago

    This will make AMD that much easier to be bought out by another company. Such as IBM, HP or even NVIDIA. Since none of them would want the foundries.

      • SubSeven
      • 11 years ago

      Hahah. Sorry to be kind of rude but Nvidia buying out AMD? You haven’t been following the market much lately have you? Nvidia is in all kinds of deep doodoo right now. It stock price has plumetted to $7/share from $40. They are in no position to buy anyone right now, especially in this kind of market where good liquidity and credit is REALLY hard to come by. With respect to IBM and HP… it is highly unlikely. HP doesn’t need AMD, this would not inline with their “core strategy/business”. IBM is a more plausible candidate but i don’t think they want to go that route.

        • willyolio
        • 11 years ago

        IBM already sold off their consumer PC division ages ago, and their laptop division more recently, i doubt they’ll want to buy one back.

          • Scrotos
          • 11 years ago

          AMD doesn’t make consumer PCs or laptops; they make CPUs. IBM also makes CPUs and has partnered with AMD in the past. And doesn’t IBM dabble in consumer-level CPU fabrication along with server-class stuff (xbox360, PS3, wii)?

          So it’s not so much that they would be buying back something that makes consumer PCs, but buying a CPU/IP company which is more in their line.

          Not that I think it’s all that likely, but I just wanted to clarify that AMD is not a consumer PC or laptop manufacturer, ergo I don’t really buy into that analogy.

        • Nitrodist
        • 11 years ago

        Why would a low stock price affect their buying power?

          • SubSeven
          • 11 years ago

          Because in this case, a higher stock price means a higher market cap and a higher market cap means it is usually easier for a company to raise capital, which in this case Nvidia will have to do because they do not have enough cash on hand to cover current liabilities, pay for the merger, and deal with AMDs enormous debt (which in totality is bigger than Nvidia’s current market cap).

          Also, if Nvidia were in fact serious about buying AMD and it planned to do so with a stock merger, then a higher stock price will help it much more than a lower one would, that’s for certain.

      • PRIME1
      • 11 years ago

      Hell, Microsoft good easily buy them just to have them make consoles from now on.

    • ub3r
    • 11 years ago

    Intel spends more on plants and research than AMD makes in annual revenue. This AbuDabhi company is a lifeline for AMD. Hopefully they will pour the money in.

    • pdjblum
    • 11 years ago

    If I read this correctly, Abu is buying a 20% stake in the company for $314 million, which implies the value of AMD after the spin off is around $1.5 billion. I don’t know how many shares are outstanding after the Abu stock acquisition, but $1.5 bill does not sound like an awful lot.

      • Master Kenobi
      • 11 years ago

      AMD has a market cap of 3.1 Billion. Intel has a market cap of 95.41 Billion. Do your own math.

        • pdjblum
        • 11 years ago

        What do you mean, do my own math? I already did. What am I missing? Please explain. Please refrain from rude and disrespectful comments. I am simply saying that this is what a private buyer would pay for the company. If that is the market cap, then isn’t it out of whack? Shouldn’t the share price drop to reflect this valuation?

          • Master Kenobi
          • 11 years ago

          Share price reflects what the market believes each share is worth, it fluctuates like the wind.

          I’m going to point out that AMD has never even cracked the top 10 list of semi-conductor companies. They are a small player.
          §[< http://skorcareer.com.my/blog/worlds-top-10-largest-semiconductor-companies-2008/2008/07/09/<]§ As this isn't a 50/50 split, and the value of a single fab exceeding 1.5 Billion USD, I find it hard to believe that AMD's worth after the merger would be only 1.5 Billion.

          • The Dark One
          • 11 years ago

          Because your math is wrong. They aren’t buying 20% of the company’s shares, they’re buying enough to bring them from 8% to 20%.

          314/0.113 ≈ 2779

            • pdjblum
            • 11 years ago

            So they are getting another 12% for $314 million. That means the company is worth 8.33 x $314 million, or $2,616 million, to a private entity. Is my math still wrong?

            • SubSeven
            • 11 years ago

            I think you are missing a few details here. This additional 12% that they are getting isn’t only costing them 314 Mil… Why are you disregarding everything else?

            • green
            • 11 years ago

            l[

            • SubSeven
            • 11 years ago

            l[

            • green
            • 11 years ago

            you’re right. i probably shouldn’t read just the snippets.

            since i’m so lazy, can you quote for me where it says ATIC and MDC are one and the same company which i would then fully accept your argument that MDC are putting in more the $314m for the ~20% share?

            i don’t mind being wrong so don’t hold back
            (seriously, i don’t mind. and still haven’t read the article)

            • SubSeven
            • 11 years ago

            ATIC and MDC are both entities belonging to the government of Abu Dhabi. So it’s not that ATIC and MDC are doing different purchases/investments in AMD. It’s that the Gov’t of Abu Dhabi is investing in AMD through its different subsidiaries. Its kind of like Kerkorian’s Tracinda Corp or Buffet’s Berkshire Hathaway. So again, when you examine this deal, don’t look at the deal in seperate entities but rather as an agregate investment by the Abu Dhabi Gov’t.

            • pdjblum
            • 11 years ago

            Thanks for the clarification, and I might be wrong, but consider that the $700 mill and the debt they are assuming is in exchange for the 55% stake in the foundry business. Wouldn’t that suggest that they are only paying $314 mill for the additional equity in AMD, and not $314 mill plus the assumption of debt?

            • SubSeven
            • 11 years ago

            No, that is not entirely accurate. Abu Dhabi is paying another 314 Mil for an additional 11.3 stake in AMD but at the same time, this is the same AMD that owns (or will own) 44.4% of the resulting subsidiary foundry business. So in essense, Abu Dhabi will own the 55.6% of the foundry per the deal and 19.3% of the 44.4% that is owned by AMD through their interst in AMD. So in aggregate the Abu Dhabi Gov’t will “own” 65.17% of the foundry business. I hope this isn’t too confusing.

            This is why you can’t just value AMD by taking 314mil/.113 to get a 2.779B value for AMD. The 314Mil is for the the 11.3% stake in AMD which has debt and owns an interest in the future Foundry. That’s why you should evaluate the deal for it’s benefits/costs on an an aggregate basis as opposed to a per transaction basis.

            • green
            • 11 years ago

            ahhh. point conceded.

      • SubSeven
      • 11 years ago

      You have read this incorrectly. Aside from “giving amd” 314 million. This is not everything though. It is other pledging additional funds towards development and it is taking a good chunk of amd debt onto its own balance sheet..

      • Windogg
      • 11 years ago

      Contrary to what many fans would like to believe, AMD is not a big player in the semiconductor market. When I was working at one of the big Top 5 companies a few years back, AMD ranked in the 20s. Despite CPUs getting all the glory, their bread and butter products were flash memory and other embedded chips.

      Even today I believe AMD is barely in the Top 15 of semiconductor companies. I like AMD products alot and still have many X2s in my lower end boxes, I would have to say they are like some sports stars. Lots of show and talk with questionable follow through.

      • not@home
      • 11 years ago

      They already had an 8% stake and now, after paying $314 million they have 20%.

    • MadManOriginal
    • 11 years ago

    Too bad the overpriced AMD purchase eventually forced them to this and too bad they have to rely on a foreign investor to complete the plan. I’ve got to say though that regardless of the board structure AMD won’t be the majority shareholder and that could come back to bite them.

      • SubSeven
      • 11 years ago

      Eventhough they do not have a majority interest in the company, they maintain the same voting privilages as Abu Dhabi.

        • MadManOriginal
        • 11 years ago

        Yea I know that was in the article. I did say ‘regardless of board structure’ so I picked up on that sentence too, I’m no corporate governance expert and I guess this is fine by AMD or maybe it’s only the best deal they could get, but not having a majority or at least 50% of shares may leave room for shenanigans later on.

      • StashTheVampede
      • 11 years ago

      Why did AMD buy ATI? AMD needed ATI in order to be a real market player like Intel. Before AMD bought ATI, they (AMD) couldn’t be a one stop shop for OEMs on purchasing major parts (chipsets, video, cpu).

      After the buyout, AMD can provide notebook chipsets, desktop chipsets and server chipsets. If AMD didn’t do this, there was no possible way they could every compete with Intel.

        • axeman
        • 11 years ago

        True, but they paid too much and the timing was horrible.

      • Anonymous Coward
      • 11 years ago

      I expect that having ATI will be more useful than having fabs, in the long run. Fabs are getting really expensive.

    • Forge
    • 11 years ago

    It’s always baffled me that TSMC is rolling in dough and never short of work, while AMD’s fabs never seem to make a dollar.

    This is long overdue, but should help both halves of AMD.

      • indeego
      • 11 years ago

      Why so baffling? TSMC is managed much better than AMD. AMD squanders opportunitiesg{<.<}g

    • adam1378
    • 11 years ago

    Not quite related but I have always wondered how the companies choose the sites for their fabrication businesses. What qualities do the companies need to satisfy their site choices. I wrote our “out of touch” congressman/woman a few times to ask about a site to be in Michigan and of course never heard anything back.

      • Damage
      • 11 years ago

      Massive tax breaks, mainly. Available, skilled labor in sufficient quantities is important, too, as is transportation infrastructure. Hence not so many Siberia fabs.

      • MadManOriginal
      • 11 years ago

      Lots of tax and infrastruture incentives is one big selling point.

      • Master Kenobi
      • 11 years ago

      Well theres quite a few things to take into account.

      #1- Logistics. How easy will it be to move your finished product from that facility enmasse to their destinations? New York being near a major sea port can do that, same with Texas. Michigan, not so much.

      #2- Workforce. You need a skilled workforce already in the area (preferably) or be willing to move there. There is a likely chance that with the schools in NY that teach electrical engineering that they will be able to find such a work force already there.

      #3- Kickbacks. The state of NY is giving them around a billion (at last glance) in tax breaks and other incentives to build a road to the new location, among other things.

      • TurtlePerson2
      • 11 years ago

      I live in Michigan and a fab would certainly be nice, but it’s the tax cuts that attract businesses. Michigan is not known for having a great labor force (a lot of unions), but we do have University of Michigan, which produces a lot of Electrical Engineers.

        • Flying Fox
        • 11 years ago

        EE in the power sense or semiconductor sense?

    • Hattig
    • 11 years ago

    This is excellent news for AMD, it fixes their money issues, guarantees their fab growth and existence, and removes a major cost from AMD.

    Now they can concentrate on designing products to make in these fabs.

    I would mention marketing those products as well, but … well maybe they can spend a few bob on that too now.

    • WaltC
    • 11 years ago

    Good deal all around. AMD retains management and ownership rights to the company *and* to the FAB, and picks up a ton of investment capital at the same time. This should put the final nail in the coffin of those “AMD is doomed” rumors that some folks are so fond of…;)

    Obviously, the only way for AMD to stay competitive with Intel in perpetuity is through joint ventures and collaborations with other well-heeled entities. This will pretty much guarantee AMD’s presence for the long haul, imo. This is great news for consumers as it will mean not only continuing competition, but more intense competition as time moves on.

      • AvKn
      • 11 years ago

      Yeah, I wish this would enable AMD to design better chips. I’d love a second Hammer.

        • WaltC
        • 11 years ago

        I don’t think you’ll have long to wait…;)

        • ssidbroadcast
        • 11 years ago

        Why ask for a Hammer when you can have an entire Bulldozer?

    • SecretMaster
    • 11 years ago

    I’m no business/financial expert so I’ll wait for others who are more informed to reply.

    But my only question is why are they still keeping Hector Ruiz around? I’m starting to think that if this spin-off fab plan was never in the works, Ruiz would still be CEO of AMD. It seems that he only stepped down because of this move. As Chairman of this new company, what sort of authority/power does he actually have?

      • Satyr
      • 11 years ago

      A chairman’s only real job is to fire the CEO :D.

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