AMD Splits Company Into Two Operations

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Big news on the microprocessor front.  AMD has announced that it will split into two separate companies of operation.  What!?  You heard it.  The first of the two companies will remain Advanced Micro Devices and will focus solely on microprocessor design operations.  This would include their x86_64 processors, GPUs [via ATI], embedded processors and chipsets.  The second company, temporarily known as “The Foundry Company”, will focus its operations on manufacturing and fabrication of silicon devices.

Plot thickens!  The new organization is not wholly funded by AMD.  AMD will only retain a 44.4 percent share of the new entity while The Advanced Technology Investment Company [ATIC] will own the remainder.  For those wondering, ATIC is an investment group formed by the government of Abu Dhabi.  For their majority share, they will pony up $2.1 billion immediately and will contribute anywhere from $3.6 billion and $6 billion more to upgrade AMD’s current chip fabs.

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

This was a must-do deal for the folks at AMD.  As of June, AMD has a recorded debt of $5.3 billion and just $1.6 billion in cash.  The new cash infusion will push progress on building an AMD fab plant in upstate New York.  AMD must make a play for expanding their fabrication capabilities in order to remain competitive with Intel.

This is the biggest announcement in our history,” said A.M.D.’s chief executive, Dirk Meyer. “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.”

This is *huge* news in the microprocessor world.  If the AMD/ATIC fab merger doesn’t pan out, the computer industry could see deeper shortages in upcoming AMD silicon.  Watch this one closely.

For more info on the release, read the full article here.