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Tuesday, October 07, 2008
AMD and Advanced Technology Investment Company of Abu Dhabi to Create New Semiconductor Manufacturing Company


AMD and the Advanced Technology Investment Company (ATIC) of Abu Dhabi today announced the creation of a U.S.-headquartered semiconductor manufacturing company.

The new company will take over the chip manufacturing business on behalf of AMD, allowing AMD invest more in developing chips.

The new global company, to be temporarily called "The Foundry Company", will serve this need by combining advanced process technology, industry-leading manufacturing facilities and aggressive plans to expand its global capacity footprint.

At the same time, the Mubadala Development Company will increase its current investment in AMD to 19.3 percent on a fully diluted basis.

AMD will contribute to The Foundry Company its manufacturing facilities, including two fabrication facilities in Dresden, Germany, as well as related assets and intellectual property rights. ATIC will invest $2.1 billion to purchase its stake in The Foundry Company, of which it will invest $1.4 billion directly in the new entity and the remainder will be paid to AMD to purchase additional shares in The Foundry Company. The Foundry Company will also assume approximately $1.2 billion of AMD?s existing debt. ATIC has committed additional equity funding to The Foundry Company of a minimum of $3.6 billion and up to $6.0 billion over the next five years to fund the expansion of The Foundry Company?s chip-making capacity beyond the manufacturing facilities initially contributed by AMD. These funds will be used by The Foundry Company to proceed with capacity expansion at its fabs in Dresden, Germany, including an upgrade of one of its fabs, and begin construction on a new facility in Saratoga County, New York, subject to the transfer of previously-approved New York State incentives. The New York facility (Fab 4X), which is expected to be constructed in the middle of 2009, will create more than 1,400 direct jobs, and, through its operation, to generate an additional 5,000 jobs in the region.

The Board of Directors of The Foundry Company will be equally divided between representatives of AMD and ATIC. AMD will own 44.4 percent and ATIC will own 55.6 percent of The Foundry Company?s fully-converted common stock upon its formation.

Doug Grose will relinquish his current role as AMD?s senior vice president of manufacturing operations to become chief executive officer of The Foundry Company. Hector Ruiz will relinquish his current role as AMD?s executive chairman and chairman of the board to become chairman of The Foundry Company.

"Today is a landmark day for AMD, creating a financially stronger company with a tightened focus," said Dirk Meyer, president and chief executive officer of AMD. "With The Foundry Company, AMD has developed an innovative way to focus our efforts on design while maintaining access to the leading-edge manufacturing technologies that our business needs without the required capital-intensive investments of semiconductor manufacturing. I particularly want to congratulate our Chairman Hector Ruiz, whose vision and leadership of our Asset Smart strategy is fulfilled today."

"We are as enthusiastic about AMD?s potential today as we were when we made our initial investment last year," said Khaldoon Al Mubarak, chief executive officer and managing director of Mubadala. "This increased investment is a strong vote of confidence in AMD?s Asset Smart business strategy, evolved leadership team, and best-in-class technology."

The Foundry Company will join the IBM joint development alliance for both silicon-on-insulator (SOI) and bulk silicon through the 22nm generation. The alliance consists of a group of semiconductor companies collaborating on next generation silicon technologies.

Upon closing of the transaction, The Foundry Company will commence operations with approximately 3,000 employees who will transition into the new company from AMD facilities in Silicon Valley, New York, Dresden, and Austin.

The transaction is expected to close at the beginning of 2009 if approved by stockholders.

AMD has always struggled against its bigger competitor Intel and in the last few years was forced to weigh the price of its pride in owning the fabricating plants, or "fabs," which most other chip makers gave up long ago.

AMD has lost market share since it was hit by problems with its high-end personal computer and server Barcelona chip, and had bumps along the road after acquiring graphics chip maker ATI.


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