AMD Finalizes Processor Manufacturing Spinoff

Advanced Micro Devices has finalized a historic deal that will officially convert its manufacturing division into a separate business.

As expected, AMD closed the deal to spin off its manufacturing business on March 2. The spinoff, temporarily called The Foundry Company, will begin manufacturing a range of AMD processors, including the Opteron and Turion chip lines.

The new company, which AMD estimates has an enterprise value of $4.3 billion, is jointly owned by AMD and the Advanced Technology Investment Company of Abu Dhabi and will have a separate management team from AMD.

The move to rid AMD of legacy fabs in Germany is expected to breathe some new life into the chip maker as it looks to better compete against Intel for market share in the x86 processor space. The move allows AMD to concentrate on microprocessor design and product marketing. At the same time, the deal provides much-needed cash for AMD and removes more than a $1 billion from its books.

In an interview Feb. 26, AMD CEO Dirk Meyer told eWEEK the spinoff deal would change the company’s culture, but the move was necessary to keep AMD competitive against the much larger Intel. On the day AMD completed the deal, March 2, Intel announced its own partnership with Taiwan Semiconductor Manufacturing to produce new platforms and devices for its line of Atom processors.

Meyer said AMD plans to move ahead with converting its processors from 65-nanometer manufacturing to 45 nm. After that, AMD plans to ramp up its line of 32-nm processors for 2010. AMD could also shift the production of its ATI graphics processors to The Foundry Company in the future.

Former AMD CEO Hector Ruiz is leaving AMD to become chairman of the new company’s board of directors. Ruiz is being replaced at AMD by former 3Com and IBM executive Bruce Claflin, who will take over as chairman of AMD’s board.

The Foundry Company is expected to announce its official name later in the week of March 2.