Advanced Technology Investment Company (ATIC) of Abu Dhabi has signed a definitive agreement to acquire chip maker Chartered Semiconductor Manufacturing of Singapore in a deal valued at S$5.6 billion (US$3.9 billion) in cash and debt, the companies said on Monday.

Chartered, a contract chip maker, will become part of GlobalFoundries, the chip manufacturing venture formed by ATIC and Advanced Micro Devices (AMD).

The CEO of GlobalFoundries, Doug Grose, will head up the combined operations, while Chartered CEO Chia Song Hwee will become chief operating officer and head the integration of the businesses, ATIC said in a statement.

The transaction is expected to close during the fourth quarter of this year. It will require approval by Chartered shareholders and government regulators.

ATIC is a technology investment company wholly owned by the government of Abu Dhabi.

The acquisition of Chartered will be its second major investment in the semiconductor industry after the deal with AMD.

GlobalFoundries has a manufacturing facility in Dresden, Germany, and another under construction in the state of New York.

ATIC hopes to combine Chartered's customer relationships and capabilities in both 8-inch and 12-inch fabrication with GlobalFoundries' technology expertise, capacity, and global footprint.

Singapore state-owned investment fund Temasek Holdings, which owns about 62 percent of Chartered’s shares, fully supports the acquisition and has signed an irrevocable undertaking to vote in support of the transaction, the statement said.

Chartered also on Monday revised up its guidance for the third quarter of 2009.

The company increased its revenue forecast slightly and narrowed its loss forecast compared to guidance given in July, because of an incremental improvement in business.