AMD stock up with chip plan

PHOTOGRAPHER: Stephen Williams

The Abu Dhabi investment firm financing construction of the GlobalFoundries computer chip plant here plans to acquire one of the largest computer chip foundry companies in Asia.

Advanced Technology Investment Co., which is owned by the government in Abu Dhabi, announced late Sunday it plans to acquire Chartered Semiconductor Manufacturing Co. of Singapore for $3.9 billion, pending regulatory approvals from that government.

The acquisition would give ATIC a bigger presence in world semiconductor manufacturing, and access to Chartered’s existing customer base.

It is being interpreted as good news for the planned GlobalFoundries Fab 2 facility here, which is due to open with a cutting-edge manufacturing process in 2012.

“We’re excited about what this will mean for our business and for the positive impact it should have on our operations in New York,” said local GlobalFoundries spokesman Travis Bullard. “The Fab 2 project will continue to be developed per our stated plans.”

Advanced Micro Devices, one of the partners in GlobalFoundries, saw its stock shoot up Tuesday after an analyst upgraded the stock, based in part on the deal.

AMD closed on the New York Stock Exchange at $5.19 a share, up almost 15 percent and the highest price in nearly a year.

The plan is to merge Chartered into GlobalFoundries, creating a larger company specializing in fabricating computer chips to order for customers who don’t have their own chipmaking capacity.

Doug Grose, currently chairman of GlobalFoundries, is expected to serve as CEO of the combined operations.

“Chartered and GlobalFoundries are well-positioned to meet the growing chip demand to come from billions of new mobile phones, cars, televisions, computers and other devices,” said Ibrahim Ajami, CEO of ATIC.

Last October, ATIC entered the semiconductor manufacturing arena by creating the partnership with Advanced Micro Devices that spun off AMD’s money-losing manufacturing operations into GlobalFoundries.

ATIC’s $5.7 billion investment in GlobalFoundries is paying much of the cost of the $4.2 billion chip factory now starting construction at the Luther Forest Technology Campus, and the Malta plant was mentioned in the corporate announcement.

“By acquiring Chartered, ATIC is expanding its investments in the semiconductor industry which currently consist of GlobalFoundries leading facility in Dresden, Germany, and a new state-of-the-art facility under construction in upstate New York,” said Waleed Al Mokarrab, chairman of ATIC.

The acquisition should increase GlobalFoundries’ ability to compete with Intel Corp., the biggest maker of microprocessor chips, and Taiwan Semiconductor Manufacturing Co., the largest Asian chip foundry company.

Foundries are a growing segment of the chip industry, and most have been based in Asia where costs are less than in this country.

But GlobalFoundries officials believe a foundry can succeed in this country because of the access to cutting-edge research technology.

“The combined capabilities of Chartered and GlobalFoundries provide technology leadership and increased manufacturing scale,” Bullard said.

GlobalFoundries is not publicly traded, but AMD shares rose Tuesday, the first day of U.S. stock trading since the deal was announced. Barclays Capital upgraded AMD stock, citing an improving computer chip market and noting the Chartered deal.

Barclays analyst Tim Luke said in a research note that the planned acquisition “may be viewed as a strategic positive both for AMD and GlobalFoundries.”

“ATIC has underlined its commitment to the foundry business and expanded GF’s potential customer list while AMD may have a path toward lower losses and deconsolidating from GlobalFoundries,” he wrote.