AMD's huge gamble: Foreign investors will co-own new foundries
Two Abu Dhabi investment firms, both arms of the Emirate's government, have helped the AMD in its "Asset Light/Asset Smart" stragegy, and with their investments, may have changed the path of the struggling company.
Mubadala Development Company, which took an eight percent stake in AMD last year, now holds almost 20 percent of AMD, and the Government of Abu Dhabi (as ATIC) has become a 50/50 partner in AMD's spun-off fabrication company.
Today AMD announced it will be spinning off its semiconductor manufacturing business with a fifty percent investment from Advanced Technology Investment Company (ATIC), a new investment project from the government of the Emirate of Abu Dhabi, Fortune magazine's richest city in the world.
Currently, the new company does not have a formal name, but is being referred to as "The Foundry Company." ATIC invested $5.7 billion to co-own AMD's two fabrication facilities in Dresden, Germany, plus its related assets and intellectual properties, and finally begin work on the Saratoga, New York fabrication facility that AMD has been talking about since 2006.
In 2006, however, AMD spoke of its plans for a 45 nm facility. As time passed, the company more recently adjusted its outlook and said the facility would be 32 nm. Today's announcement said, "The Foundry Company will join the IBM joint development alliance for both silicon-on-insulator (SOI) and bulk silicon through the 22 nm generation. The alliance consists of a group of leading semiconductor companies collaborating on next generation silicon technologies."
After completing the long-awaited Saratoga facility, The Foundry Company plans to open a facility in Abu Dhabi. When asked about job cuts elsewhere in AMD, COO Dirk Meyer today said, "This is about job creation, and the interest of creating jobs for the community." The company expects the Saratoga facility will create nearly 1,700 new jobs.
Current AMD Chairman Hector Ruiz announced in July that he would be stepping down from his CEO post at AMD into an "executive chairman of the board" slot, with Dirk Meyer taking the helm of AMD. Today, the announcement was made that Ruiz will become chairman of The Foundry Company. Senior Vice President of Manufacturing Operations Doug Grose will become the Foundry Company's CEO. AMD will own 44.4% of the company's stock, and ATIC will own 55.6%.
And as Mubadala has increased its ownership of AMD by purchasing $314 million worth of 58 million new AMD shares, it will be electing its own member to the company's board of directors. This designee will likely participate in the naming of AMD's new chairman, as the company declined comment today as to how it plans to fill that vacancy.