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.