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Old 10-07-08, 03:32 PM   #1
kam03
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Default AMD Splits in Two

One company will design chips, the other will manufacture them

It’s no secret that AMD has been in trouble lately. Despite gaining a commanding position in the graphics industry, the chipmaker giant has been beaten by Intel in the microprocessor market. With AMD's first 45 nm product, Shanghai, forced to try to enter the market at the same time as Intel's second generation 45 nm Nehalem, and with consist quarterly losses something had to be done.

Today AMD announced a shocking decision that will rock the computer industry -- in order to try to stay competitive, it is splitting in two. From the ashes of AMD will rise two companies. One will design chips and keep the brand name. The other, officially named the Foundry Company, will manufacture chips. The two companies will work closely together, but be independent.

The move also came with good news -- two Abu Dhabi companies have elected to inject at least $5.7B USD into the pair of companies. Most of this money will go to the Foundry Company, which will use it to build a new factory in Albany, N.Y., and to upgrade its Dresden, Germany factory.

AMD retains a 44.4 percent stake in the new company. The majority ownership belongs to Advanced Technology Investment Company. Advanced Technology, a company created by Abu Dhabi's wealthy government, has promised immediate investment of $2.1B USD into the pair. It says it will follow this with an additional investment that could be anywhere from $3.6B to $6B USD. Despite the majority stake, Advanced Technology consented to have an equal number of votes as AMD on the Foundry Company's board.

Advanced Technology isn't the only Abu Dhabi company to want a big piece of the AMD pie either. Mubadala Development Company, which bought an 8 percent stake in AMD last November, will pay $314M USD to buy 58 million shares of AMD stock, to bring its stake in the presplit company to 19.3 percent. Mubadala and Advanced Technology, despite being competitors in some respects, worked together closely on the new deal.

Khaldoon Al Mubarak, chief executive of Mubadala, states, "We generally believe this deal is a game changer for the industry. It’s bold, and I think it’s smart."

Waleed al-Mokarrab, chairman of Advanced Technology added about AMD's recent struggles, "Yes, it is a cyclical business, but over time the trajectory is always upwards"

The AMD move is a bit of a shock to the electronics industry, but not an entire surprise. The company recently announced it was $5.3B USD in debt, with only $1.6B USD of cash on hand. AMD’s chief executive, Dirk Meyer, said the timing was right to turn for help. He stated, "This is the biggest announcement in our history. This will make us a financially stronger company, both in the near term and in the long term, as a result of being out from the capital expense burden we have had to bear."

Before AMD can be officially split up, the deal must meet regulatory and shareholder scrutiny. The deal is expected to be complete by 2009. The newly spawned Foundry Company will produce chips for others besides AMD. It will also compete with the independent Asian foundry firms such as TSMC.

The split may strike some as a bit ironic as AMD’s co-founder and longtime chief executive, W. J. Sanders III, known as Jerry, once quipped "real men have fabs", according to company lore. New CEO Mr. Meyer referenced the joke stating, "We feel like we’re still pretty manly at AMD. Frankly, the math has changed."

The Foundry Company at launch will control AMD's two chip foundries in Dresden, Germany. One is in need of an upgrade to make modern chips. Plans will continue to build the larger state-of-the-art Malta, N.Y. foundry, which will cost $3.2B USD. The state of New York is offering the new company $1.2B USD in incentives to build the plant, as it will employ 1,400 workers. The Foundry Company will assume $1.2B USD, or roughly a quarter, of AMD's debt


Link: http://www.dailytech.com/AMD+Splits+...ticle13139.htm
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Old 10-08-08, 07:43 PM   #2
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Default Re: AMD Splits in Two

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Originally Posted by kam03 View Post
One company will design chips, the other will manufacture them

Itís no secret that AMD has been in trouble lately. Despite gaining a commanding position in the graphics industry, the chipmaker giant has been beaten by Intel in the microprocessor market. With AMD's first 45 nm product, Shanghai, forced to try to enter the market at the same time as Intel's second generation 45 nm Nehalem, and with consist quarterly losses something had to be done.

Today AMD announced a shocking decision that will rock the computer industry -- in order to try to stay competitive, it is splitting in two. From the ashes of AMD will rise two companies. One will design chips and keep the brand name. The other, officially named the Foundry Company, will manufacture chips. The two companies will work closely together, but be independent.

The move also came with good news -- two Abu Dhabi companies have elected to inject at least $5.7B USD into the pair of companies. Most of this money will go to the Foundry Company, which will use it to build a new factory in Albany, N.Y., and to upgrade its Dresden, Germany factory.

AMD retains a 44.4 percent stake in the new company. The majority ownership belongs to Advanced Technology Investment Company. Advanced Technology, a company created by Abu Dhabi's wealthy government, has promised immediate investment of $2.1B USD into the pair. It says it will follow this with an additional investment that could be anywhere from $3.6B to $6B USD. Despite the majority stake, Advanced Technology consented to have an equal number of votes as AMD on the Foundry Company's board.

Advanced Technology isn't the only Abu Dhabi company to want a big piece of the AMD pie either. Mubadala Development Company, which bought an 8 percent stake in AMD last November, will pay $314M USD to buy 58 million shares of AMD stock, to bring its stake in the presplit company to 19.3 percent. Mubadala and Advanced Technology, despite being competitors in some respects, worked together closely on the new deal.

Khaldoon Al Mubarak, chief executive of Mubadala, states, "We generally believe this deal is a game changer for the industry. Itís bold, and I think itís smart."

Waleed al-Mokarrab, chairman of Advanced Technology added about AMD's recent struggles, "Yes, it is a cyclical business, but over time the trajectory is always upwards"

The AMD move is a bit of a shock to the electronics industry, but not an entire surprise. The company recently announced it was $5.3B USD in debt, with only $1.6B USD of cash on hand. AMDís chief executive, Dirk Meyer, said the timing was right to turn for help. He stated, "This is the biggest announcement in our history. This will make us a financially stronger company, both in the near term and in the long term, as a result of being out from the capital expense burden we have had to bear."

Before AMD can be officially split up, the deal must meet regulatory and shareholder scrutiny. The deal is expected to be complete by 2009. The newly spawned Foundry Company will produce chips for others besides AMD. It will also compete with the independent Asian foundry firms such as TSMC.

The split may strike some as a bit ironic as AMDís co-founder and longtime chief executive, W. J. Sanders III, known as Jerry, once quipped "real men have fabs", according to company lore. New CEO Mr. Meyer referenced the joke stating, "We feel like weíre still pretty manly at AMD. Frankly, the math has changed."

The Foundry Company at launch will control AMD's two chip foundries in Dresden, Germany. One is in need of an upgrade to make modern chips. Plans will continue to build the larger state-of-the-art Malta, N.Y. foundry, which will cost $3.2B USD. The state of New York is offering the new company $1.2B USD in incentives to build the plant, as it will employ 1,400 workers. The Foundry Company will assume $1.2B USD, or roughly a quarter, of AMD's debt


Link: http://www.dailytech.com/AMD+Splits+...ticle13139.htm
BUMP

Can't believe nobody here has commented on this. I periodically browse these forums cause there are a few members here that actually have something to contribute. I was hoping to see their response to this. I myself have mixed feelings about it, so I guess you'd same I'm "undecided".

Hope it plays out well for AMD in the end.
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Old 10-08-08, 08:40 PM   #3
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Default Re: AMD Splits in Two

A healthy AMD is good for all of us. Lower prices... better technology pushes. As always, between AMD and Intel, whoever is on top, thats who I buy from
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Old 10-08-08, 09:11 PM   #4
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Default Re: AMD Splits in Two

Redeemed!!!! Hows life buddy?
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Old 10-08-08, 10:41 PM   #5
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Yo 'deemed, my GPU is red!

Just like my lipstick...
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Old 10-08-08, 10:50 PM   #6
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Default Re: AMD Splits in Two

Bye bye AMD. It's been good.
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Old 10-08-08, 11:06 PM   #7
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Bye bye AMD. It's been good.
Not yet ! AMD will just manufacture Nehalem CPU's for us with its newly formed manufacturing division.
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Old 10-08-08, 11:14 PM   #8
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::

They wouldn't be so bold. ::
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Old 10-08-08, 11:14 PM   #9
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Default Re: AMD Splits in Two

More room in TSMC for Nvidia? Or TSMC has to get its game together now! Better process and better prices and faster delivery of new process techs!!!
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Old 10-08-08, 11:27 PM   #10
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Default Re: AMD Splits in Two

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Redeemed!!!! Hows life buddy?
Life is going good. Busy, but good.

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Originally Posted by MUYA View Post
More room in TSMC for Nvidia? Or TSMC has to get its game together now! Better process and better prices and faster delivery of new process techs!!!
AMD will still be AMD, just they'll no longer have any fabs. From my understanding of this deal it will put them in a pretty healthy position to compete more viciously with Intel and nVidia. The only downfall is if ATIC (or the UAE) decide they no longer want to perform business with AMD it could lead to major issues. The UAE now owns 20% of AMD, while AMD owns around 44.1% of "The Foundry Company" and has 50% of the voting power. This isn't even mentioning the financial backing AMD now has via the UAE. So from my understanding the manufacturing of AMD CPUs and GPUs will have priority, but if any of their fabs aren't producing at full capacity, the unused tools can then be put to use for other companies. In other words- if Fab 36 is only operating at 50% capacity, and that's all that AMD needs, then nVidia and Intel can actually make use of the remaining 50% of Fab 36- for a fee of course, which AMD will receive a share of. Kind of funny how this could play out. The Foundry Company could, in short, end up producing GPUs for nVidia, and part of that profit would then go to AMD.

On another forum (where I first read about this) some members had brought up how this could be bad- politically (with this involving the UAE and American tech as the UAE now has direct access to all of AMD's I.P.)- I'm not so sure I'm worried about that. How about you guys?
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Old 10-08-08, 11:32 PM   #11
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Redeemed! How's it goin' bro?
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Old 10-09-08, 07:01 PM   #12
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On topic stay please DOC.
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