Advanced Micro Devices Inc has partnered with Advanced Technology Co to spin off a new manufacturing venture. The company said that factories to make its AMD chips are highly expensive and it can’t afford to compete with rival Intel Corp as a result.
Advanced Technology Investment Co is an investment arm of the Persian Gulf state of Abu Dhabi. It has agreed to invest up to $8.1 billion over the next five years. The partnership will spin off a brand new company.
The new company will be called Foundry Co.
Mubadala Development Co, which already has investments in AMD, will pay $314 million to increase its stake in chip maker to 19.3 percent from 8.1 percent. The company is also a sole shareholder from the Abu Dhabi government.
The partership will give the chip maker $1 billion in cash. In addition, the new company will pay $1.2 billion of AMD’s $5.3 billion debt.
AMD is the world second maker of microprocessors. There are mixed signals from financial analysts on whether this is a good deal or not. However, for AMD, it needs a deal like this in order to compete with Intel on manufacturing.