AMD is now offering details of on its much anticipated "asset smart" plan, which will allow the chip maker to spin off its processor manufacturing facilities into a new company. The plans will allow AMD to trim its payroll, concentrate on engineering and designing new processors and graphics chips for PCs and server systems, and allow AMD to better compete with Intel.
Micro Devices is finally detailing its long-talked-about "asset smart"
plan, which will allow the chip maker to spin off its manufacturing facilities
into a new company while allowing AMD to
reduce its financial debt and better compete against Intel
The new manufacturing company, which will be temporarily called "The Foundry
Company," will be a joint venture between AMD
and the Advanced Technology Investment Company (ATIC), a technology investment
company founded in 2008 and owned by the government of Abu
released some specifics of the new agreement and how The Foundry Company will
operate during an Oct. 7 press conference. The deal to create the new company
will close sometime in the early part of 2009. While the new manufacturing
company will be a joint venture, it will retain a strong AMD presence, with
Doug Grose, AMD's current senior vice president of manufacturing operations,
becoming the CEO of The Foundry Company and Hector Ruiz stepping into the role
of chairman of the board of the new company.
Ruiz stepped down as CEO of AMD
after the company announced its second-quarter financial results. He will leave
AMD when the new company is formed in 2009.
During a call with reporters and analysts, AMD
CEO Dirk Meyer said the creation of the new
company will be viewed as one of the most significant events in the history of AMD,
while allowing the company to better compete against Intel. Now that AMD
will no longer have to support its own fabs, the company's engineers can concentrate
exclusively on CPU and graphics design and marketing.
"With this transaction, AMD is ensured
access to leading-edge manufacturing process technologies without the capital
expense requirements that come from owning a world-class manufacturing
operation," said Meyer. "We can now intensify our focus on serving our
customers as the only company capable of delivering both world-class CPU and
graphics designs for next-generation computing and digital media platforms."
Under the agreement, the new company will take ownership of AMD's
two fabrication plants, or fabs, in Dresden, Germany, where AMD's
line of x86 processors are manufactured. For its part, ATIC will invest $2.1
billion to purchase a stake in The Foundry Company. Of the $2.1 billion, ATIC
will invest $1.4 billion directly in the new manufacturing company, with the
remainder paid to AMD to purchase additional
shares in The Foundry Company.
In addition to the cash investment, AMD
will trim about 3,000 jobs from its payroll when those workers move over to The
Foundry Company. Earlier this year, AMD
announced that it would lay off about 10 percent of its work force.
The Foundry Company will then become the primary manufacturing facility for AMD.
While this is a new company, AMD expects
that its research and development relationship with IBM
will remain the same. The new company will also become part of IBM's
partnership to develop new types of processor technology.