AMD Partners with Advanced Technology

By: Sara Smith
Staff Writer
Published: Oct 8, 2008

Advanced Micro Devices Inc is partnering with Advanced Technology Investment Co in an effort to outsource its factories. The recent AMD news has financial analysts stumped. Advanced Technology is an investment arm of the Persian Gulf state of Abu Dhabi.

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.