AMD is splitting its business into two companies. The first will be focused on designing microprocessors, and the second will actually manufacture them – a process which is expensive and debt-laden. The new manufacturing company will be called the Foundry Company, and AMD will own 44.4 percent of it, with the rest being owned by an Abu Dhabi company called Advanced Technology.
With the cash raised by this split, AMD will finance a new chip factory near Albany, New York, and an upgrade to an existing plant in Dresden, Germany. I imagine they’ll also use a chunk of the cash to help pay off some of their US$5.3 billion in debt.
Intel has the lead in the microprocessor market by quite some way. AMD has long struggled to keep up, but this development will likely help. Chief executive at AMD, Dirk Meyer, told Tech Digest that this is “the most important transaction in the history of AMD”.
I’m inclined to agree – but although this will keep AMD alive, it does leave Intel as the sole significant chip manufacturer which both designs and builds its products. That’s a strong advantage in a market where product developments are mainly limited by advances in manufacturing technology.
AMD (via New York Times)