Components & Peripherals News
AMD Spins Into Two Companies
Andrew R. Hickey
During a press conference Tuesday morning, AMD said it would split into two, one company that focuses on microprocessor design and the other on the business of manufacturing them.
As part of the split, AMD is launching a new company, dubbed The Foundry Company, a pairing between AMD and Advanced Technology Investment Co. (ATIC). The pair will launch a new U.S.-based semiconductor manufacturing company in New York. The Foundry Company, which also includes a massive investment from Abu Dhabi-based Mubadala Development Co., will address the growing demand for independent foundry production capabilities, AMD said.
"This is about creating an independent foundry company here in the U.S. with assets around the world," AMD CEO and president Dirk Meyer said in a Webcast Tuesday morning.
According to AMD, the Foundry Company will combine advanced process technology, manufacturing facilities and plans to expand its global capacity footprint.
"We are joining with the Advanced Technology Investment Company to create a brand new company -- one that epitomizes a new global enterprise with talent and resources from around the world," Meyer said. "This will result in a financially stronger and more focused AMD."
AMD said Mubadala will invest $314 million, more than doubling its current stake in AMD, reaching 19.3 percent from 8.1 percent.
ATIC, also based in Abu Dhabi, will invest $2.1 billion, assuming $1.2 billion of AMD's current debt, for a stake in Foundry. ATIC also expects to invest between $3.6 billion and $6 billion to the Foundry Company over the next five years to help AMD, the world's No. 2 chip maker, expand its capacity beyond the manufacturing facilities AMD initially contributes to the Foundry Company. The funds will be used by the Foundry Company to expand capacity at its fabs in Dresden, Germany and the construction of the new facility in Saratoga County, N.Y.
AMD said the New York facility will create more than 1,400 direct jobs and generate an additional 5,000 jobs in the region. Meyer said the New York facility will be the only independently managed, leading-edge semiconductor manufacturing foundry in the U.S.
The Foundry Company's board of directors will be equally divided between representatives of AMD and ATIC, with AMD owning a 44.4 percent stake and ATIC holding the remaining 55.6 percent.
The spinoff comes as AMD struggles with massive debt and executive departures. In the second quarter, AMD lost $1.19 billion, nearly doubling its losses of a year before.
AMD senior vice president of manufacturing operations will become CEO of the Foundry Company, while Hector Ruiz, who stepped down as AMD CEO in July and assumed a chairman role, will take a chairman spot with the Foundry Company.
"Today is a landmark day for AMD, creating a financially stronger company with a tightened focus," Meyer said in a statement. "With The Foundry Company, AMD has developed an innovative way to focus our efforts on design while maintaining access to the leading-edge manufacturing technology that our business needs without the required capital-intensive investments of semiconductor manufacturing."
The Foundry Company is expected to launch in 2009, with construction to begin on the new New York facility in the same year. The Foundry Company will also join the IBM joint development alliance, a collaborative group of leading semiconductor companies working on next-generation silicon technologies, for both silicon-on-insulator and bulk silicon through the 22nm generation.