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What you need to know for 01/19/2018

Deal clears way for chip manufacturer

Deal clears way for chip manufacturer

Advanced Micro Devices and two Abu Dhabi investment funds on Monday completed the deal creating a ne

Advanced Micro Devices and two Abu Dhabi investment funds on Monday completed the deal creating a new manufacturing company that will build a $4.6 billion computer chip factory at the Luther Forest Technology Campus.

The closing was the final step in creating a new chip fabrication company being temporarily called The Foundry Co., a partnership between AMD and the Advanced Technology Investment Fund of Abu Dhabi.

Senior Foundry Co. officials, including chairman Hector Ruiz, are scheduled to discuss the company’s plans — and announce a new permanent name and logo for the company — on Wednesday at the Saratoga Technology and Energy Campus, where AMD has office space.

The new company now expects to begin land-clearing for the 1.3 million-square-foot Malta factory within the next three weeks and to begin construction in June. It will employ about 1,465 people when it opens in about 2012.

The Luther Forest plant will be the first U.S.-based “foundry” — a chip factory that is free to make chips for anyone, though AMD is expected to be its main customer.

It will be the first chip factory in the world designed to make 300 millimeter wafers that are then cut into tiny 32 nanometer chips, company officials have said.

AMD officials said the closing completes their “Asset Smart” strategic transaction, involving ATIC and a second Abu Dhabi investment fund, Mubadala Development Company, which is buying AMD stock.

ATIC will invest $2.1 billion in the new venture immediately and another $5 billion over the next five years — cash badly needed, since AMD has been losing money on its manufacturing operations for the past two years.

ATIC will own 65 percent of the new company, though control will be split evenly between AMD and ATIC.

The new company will also own AMD’s two chip plants in Dresden, Germany, as well as the Luther Forest project.

In the transaction, AMD is receiving $700 million from ATIC, and the Foundry Co. assumes responsibility for approximately $1.1 billion of AMD debt. Mubadala also paid AMD approximately $125 million for 58 million shares of AMD stock.

Under the new arrangement, AMD as a corporation will concentrate on research, design and marketing, leaving the chip manufacturing to the new company.

“With the close of this historic transaction, AMD and its committed partners have conceived two strong industry-leading companies capable of charting future courses that will dramatically improve the technology industry,” said Dirk Meyer, president and chief executive officer of AMD.

AMD is the world’s No. 2 maker of microprocessor chips but is a distant second in market share to Intel Corp.

The deal to create the Foundry Co. was announced last October. It was approved by AMD shareholders on Feb. 18 after it cleared a series of federal, state and European regulatory reviews.

The state has transferred $1.2 billion in economic development incentives to build at Luther Forest from AMD to the new company.

The Malta Town Board on Monday named Stuart Mesinger of The Chazen Companies as its project manager to coordinate relations between the company and the town during the plant’s construction.

The Malta Planning Board will meet March 10, when it is expected to vote on giving the approval needed to begin land-clearing.

AMD first announced its plans to build a factory in Malta in June 2006 and must start construction work by this June to qualify for the state incentives.

The plant is expected to make AMD’s next-generation “Fusion” chip — one that combines calculating and graphics capacities in a single chip — which currently requires different chips.

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