As part of the long-awaited and expected plan--which impacts 3,000 jobs--AMD (Sunnyvale, Calif.) will spin off its manufacturing operations into a new foundry company that could compete against TSMC, UMC, and possibly, one of its partners in Chartered. So, in effect, AMD will essentially become a fabless design house.

The Abu Dhabi government will pay $2.1 billion for a stake in the new foundry company, according to The New Times.. Abu Dhabi will contribute $3.6-to-$6 billion more over time to build new fabs, according to the report.

The new foundry company, dubbed Foundry Co., will assume AMD's two fabs in Germany as well as a proposed plant in New York, according to the report. The foundry company will build chips for AMD and outside vendors.

Advanced Technology Investment Co., which is part of the Abu Dhabi government, will own about 56 percent of the foundry company, according to other reports. AMD will own the rest, according to reports.

About 3,000 of AMD's workers will move to the foundry unit. Doug Grose, who runs AMD's manufacturing operations, will run the new company, according to reports. AMD Chairman and former CEO Hector Ruiz ''will step down as a director and head the board at the new company,'' according to Bloomberg.

All told, Abu Dhabi will invest $8.4 billion in AMD. ''The new company, which will assume $1.2 billion of AMD's debt, will receive as much as $6 billion from Abu Dhabi to expand the factories and get $1.4 billion in operating capital,'' according to Bloomberg..

Last year, Abu Dhabi's Mubadala Development Co. acquired a 8.1 percent stake in AMD. That group will now pay an additional $314 million to double its stake in AMD to 19 percent, according to the report.

By: DocMemory
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