Processors Toolkit

AMD splits off its chip-manufacturing business

Colin Barker ZDNet.co.uk

Published: 07 Oct 2008 16:43 BST

AMD is to split off its manufacturing operations through a finance deal with a firm from the United Arab Emirates, which will leave AMD with total control of only its design wing.

The chipmaker confirmed on Tuesday that it has signed an agreement with the Advanced Technology Investment Company (ATIC) of Abu Dhabi to form a joint company that will take over the company's manufacturing interests.

In a conference call on Tuesday, AMD outlined the scheme, which will see an eventual investment from ATIC of $5.7bn (£3.2bn) for a 56 percent stake in the joint venture which will be called the Foundry Company. AMD will retain the remaining 44 percent of the new company. AMD has two major plants: one in Dresden, Germany; and another in New York State.

Work has already begun in New York and, according to AMD, investment there will lead to another 1,400 jobs. There will, however, be "a small number of layoffs" as a result of the investment, according to company chief executive, Dirk Meyer.

The initial investment will be $2.1bn, of which $700m will come from ATIC.

In a statement, IBM welcomed the job creation in New York, a state where IBM itself has considerable investment. The company has a major technology base in nearby Burlington, Vermont.