Analysts: Spin-off puts AMD back in the fight with Intel

Wall Street welcomes news that a Middle East firm is taking a load of debt off AMD's back.

The new offshoot business, which is being temporarily called The Foundry Co., will be co-owned by AMD and ATIC, which is owned by the government of Abu Dhabi in the United Arab Emirates. ATIC will shell out US$2.1 billion -- US$1.4 billion going to the new company and the rest going straight to AMD, according to AMD.

The Foundry will assume about US$1.2 billion of AMD's debt.

ATIC will own 55.6% of The Foundry and AMD will own 44.4%. Its board of directors will be equally divided between representatives from AMD and ATIC.

As part of the deal, Mubadala Development Co., also based in Abu Dhabi, will pay $314 million to increase its stake in AMD from 8.1% to 19.3%.

"We are joining with the Advanced Technology Investment Co. to create a brand new company -- one that epitomizes a new global enterprise with talent and resources from around the world," said Dirk Meyer, AMD's president and CEO, in a conference call this morning. "This will result in a financially stronger and more focused AMD."

Although AMD will be The Foundry's first customer, it will build chips for other companies as well.

Doug Grose, senior vice president at AMD and the incoming CEO of The Foundry, said in a conference call Tuesday that ATIC has promised to invest between US$3.6 billion and US$6 billion over the next five years to fund an expansion of The Foundry's chip-making capacity. The plan includes going forward with a planned capacity expansion at a fab facility in Dresden, Germany, next year.

Lau, however, noted that all the influx of cash does not erase all of AMD's debt. The company has been carrying about $5.4 billion in debt, so the deal will leave it with US$3.3 billion in debt. "There is still a lot of debt but the cash burn to maintain the fabs is no longer there," he added. "We believe this is well received as a positive for the company going forward."

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Sharon Gaudin

Computerworld
Topics: AMD
Comments are now closed.

Latest News Articles

Most Popular Articles

Follow Us

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Resources

Best Deals on GoodGearGuide

Compare & Save

Deals powered by WhistleOut
WhistleOut

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?