AMD announces new partnership, plans to build Luther Forest plant
From Staff and wire reports
Updated: Tuesday, October 7, 2008 6:37 AM EDT
NEW YORK – Advanced Micro Devices announced this morning it is going forward with construction of a new computer chip manufacturing facility in Malta’s Luther Forest technology campus – with a little help from its friends.
The struggling semiconductor firm – the second largest in the world – is partnering with the Advanced Technology Investment Company of Abu Dhabi to create a new company, temporarily called “The Foundry Company,” that will infuse AMD with cash, take on some of the Sunnyvale, Calif.-based firm’s debt and upgrade its manufacturing facilities, according to a prepared statement.
Construction of the Malta plant, expected to employ 1,400 once it comes online, is dependent on whether AMD is successful in transferring state incentives – totaling about $1.2 billion in tax breaks and other perks – to the new company, which will take on operation of AMD’s manufacturing facilities.
Construction could begin on the plant in the middle of 2009, according to the press release.
In return, the Abu Dhabi firm will contribute $2.1 billion to purchase its stake in The Foundry Company, of which $1.4 billion will be invested into The Foundry Company, while the rest will be given to AMD in return for an ownership stake in the tech firm.
ATIC has committed additional equity funding to The Foundry Company of a minimum of $3.6 billion and up to $6.0 billion over the next five years to fund the expansion of The Foundry Company’s chip-making capacity beyond the manufacturing facilities initially contributed by AMD.
These funds will be used by The Foundry Company to begin construction of the Malta facility. The New York facility is expected to create more than 1,400 direct jobs, and, through its operation, to generate an additional 5,000 jobs in the region, AMD has said.
Once operational, the New York facility will be the only independently-managed, leading-edge semiconductor manufacturing foundry in the United States.
The Board of Directors of The Foundry Company will be equally divided between representatives of AMD and ATIC. AMD will own 44.4 percent and ATIC will own 55.6 percent of The Foundry Company’s fully-converted common stock upon its formation.
Doug Grose will relinquish his current role as AMD’s senior vice president of manufacturing operations to become chief executive officer of The Foundry Company. Hector Ruiz will relinquish his current role as AMD’s executive chairman and chairman of the board to become chairman of The Foundry Company. To augment its announced leadership, the new company plans an aggressive recruitment strategy to round out a world-class semiconductor manufacturing leadership team.
ATIC is an investment company formed by the government of Abu Dhabi to invest in advanced technology opportunities.
“Today is a landmark day for AMD, creating a financially stronger company with a tightened focus,” said Dirk Meyer, president and chief executive officer of AMD. “With The Foundry Company, AMD has developed an innovative way to focus our efforts on design while maintaining access to the leading-edge manufacturing technologies that our business needs without the required capital-intensive investments of semiconductor manufacturing.
“I particularly want to congratulate our Chairman Hector Ruiz, whose vision and leadership of our Asset Smart strategy is fulfilled today.”
Upon closing of the transaction, The Foundry Company will commence operations with approximately 3,000 employees who will transition into the new company from AMD facilities in Silicon Valley, New York, Dresden, and Austin. The new company’s principal headquarters will be in Silicon Valley and its research and development and manufacturing leadership teams and ecosystems will be based in New York, Dresden, and Austin.
After the upgrade and expansion in Dresden and the build-out of the New York facility, The Foundry Company envisions expanding its global manufacturing footprint over time, if commercially justified, to also include new fabrication facilities in Abu Dhabi.
The transaction is expected to close at the beginning of 2009, following satisfaction of conditions such as approvals from regulators, transfer of previously-confirmed New York incentives to The Foundry Company, and stockholder approval for the issuance of common stock and warrants to the Abu Dhabi company.
The Post-Star will update this story throughout the day today. Read more in Wednesday’s edition.
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