After failing to reach quorum earlier this month, Advanced Micro Devices' shareholders approved the deal that will spin off the company's chip manufacturing facilities into a new business called "The Foundry Company." The deal, which involves investors from Abu Dhabi, looks to make AMD more competitive against Intel in the x86 processor market. The deal to create The Foundry Company is now expected to close March 2, according to AMD.
After failing to get enough shareholder votes
earlier this month, Advanced
announced Feb. 18 that its stockholders had approved the deal
to spin off its chip manufacturing facilities into a new company.
The deal to create the new business, tentatively
called "The Foundry Company," is now expected to close March 2. The agreement
to create the new manufacturing company also involves the Advanced Technology
Investment Company of Abu Dhabi.
Under the agreement, the
new company will take ownership of AMD's two fabrication plants, or fabs, in
where AMD's line of x86 processors are manufactured.
In addition, the new
company plans to complete work on a new fab in upstate New York.
The spinoff is expected to save AMD money and allow
the company to concentrate on processor design and marketing as a way to better compete against Intel
in the x86 market.
At the same time, The Foundry Company will continue
to manufacture processors for AMD and execute plans to expand its business by
competing against the likes of other chip manufacturing companies such as Taiwan
Semiconductor Manufacturing. Right
now, AMD is looking to convert most of its manufacturing to 45-nanometer, and
the deal is not expected to stop those plans.
However, the process of creating this new company
has run into some problems.
In addition to the shareholder vote delay, Intel has
made some noise about the deal and has publicly questioned whether the plan
violates an agreement AMD has with Intel to use some of its processor technology. AMD
CEO Dirk Meyer dismissed those concerns
during the company's recent call
with financial analysts.
The deal also comes at a time when AMD
is desperate to return to profitability, especially as it has watched demand
for servers and PCs
drop as the United States slips deeper into a recession
and global demand for laptops and other hardware begins to dwindle. AMD has
also eliminated jobs and imposed salary freezes.
At the same time, Intel
is gearing up to move some of its fabs to 32-nm production
later this year
and the company also has plans to close or convert some of its older
recently announced that it plans to invest $7 billion
in its U.S.-based