Chicago (IL) – Late Monday, AMD told media and analysts that the company will make a significant corporate announcement on Tuesday. Industry sources confirmed to TG Daily that the announcement will cover the company’s much anticipated “Asset Smart” strategy, which will include the separation of AMD into a chip development and a manufacturing company.

AMD president Dirk Meyer and other company executives are expected to announce the split at 8 am EDT on Tuesday morning. While we were able to receive a confirmation that this announcement in fact will be the long awaited split into two companies, Bloomberg learned that the government will be providing the two new companies with about $8.4 billion.

Bloomberg said that Abu Dhabi will pay AMD $700 million for a stake in a new manufacturing company that will run the firm’s two plants in Germany and another one that is currently planned to be built in New York. The new company will take over $1.2 billion of AMD’s debt and will receive a $6 billion cash infusion from Abu Dhabi to expand the factories and get $1.4 billion in operating capital. Also, Abu Dhabi will pay $314 million to double its current stake in AMD to 19%.

While the investment effectively turns the AMD as we know it into a fabless company, it will also remove much of AMD’s debt that has limited AMD’s competitiveness since the acquisition of ATI in 2006.

TG Daily reported about AMD’s Asset Smart strategy as early as April of this year, highlighting the complex scenario behind the deal. In August, we reported about increased chatter surrounding Asset Smart and a possible announcement of the deal in September.

As of now, it remains unclear who will head the new manufacturing company. Our sources indicate that former AMD CEO Hector Ruiz will be running AMD’s former fabs.   

So what does this mean?

Oct 07, 2008 07:44     

I really hope this doesn't mean AMD will no longer provide Intel with competition. Competition is the only thing keeping Intel from charging $1000 for every chip they make.
Jay report abuse vote down vote up Votes: +1

Jettisoned baggage

Oct 07, 2008 08:25     

Now AMD can focus on making the processors and then finding the best fabrication for those chips. AMD-fab can focus on catching up to the likes of TSMC, Intel and Samsung. What I'm concerned about is how tightly or loosely coupled these two will be. What if AMD-fab doesn't perform and AMD is still forced to make a certain percentage of products through them? What if AMD-fab finds other clients that consume production capacity? I think the cash infusion will make both companies better though. It could be a brilliant move.

Shaun report abuse vote down vote up Votes: +1

NEW AMD

Oct 07, 2008 08:32     

if Israel can fund Intel in Israel to build a state of the art fab foundry, why cant Dubai, and so this better happen/work coz otherwise there will be no amd after the bank crisis (no loans). Dubai is the only people that would invest in amd. so now we will see!, Intel will not be the first to new technology anymore, Amd will have much more money for RND, New state of the art FABS etc. In the end AMD will be a better equipped company with vast resources at hand. FUSION anyone.

x1reme report abuse vote down vote up Votes: +5

Wow, $8.4 Billion? Must be freakin nice! www.priva...

Oct 07, 2008 11:09     

Wow, $8.4 Billion? Must be freakin nice! www.privacy.es.tc
John Jones report abuse vote down vote up Votes: +0

end of competition

Oct 07, 2008 11:19     

what are the Competition Commission doing? Having competition gives the best value to the consumer and keeping both Intel and AMD on toes to develop innovative solutions. Suresh (www.comparecontractmobiles.com)
suresh report abuse vote down vote up Votes: +0

sour pants

Oct 07, 2008 11:33     

FilthyRichmond.com
Joss report abuse vote down vote up Votes: +0

it means...

Oct 07, 2008 11:40     

buy their stock - it's going up
neildo report abuse vote down vote up Votes: +0

Disappointing news for the x86 CPU market

Oct 07, 2008 14:48     

When I heard AMD was struggling financially and was coming up with this plan, I was disappointed. If AMD has to do this, it seems to mean they haven't been doing well and may no longer be able to provide significant competition against Intel. AMD was so strong just a few years ago, too. Sad..
Eric report abuse vote down vote up Votes: -1