{"id":711,"date":"2008-10-07T05:00:47","date_gmt":"2008-10-07T05:00:47","guid":{"rendered":"http:\/\/alienbabeltech.com\/?p=661"},"modified":"2008-10-07T05:00:47","modified_gmt":"2008-10-07T05:00:47","slug":"amd-to-make-significant-corporate-announcement-to-spin-off-its-fabs","status":"publish","type":"post","link":"http:\/\/alienbabeltech.com\/main\/amd-to-make-significant-corporate-announcement-to-spin-off-its-fabs\/","title":{"rendered":"AMD to Spin-Off its Fabs – Splitting into Two Companies! [update]"},"content":{"rendered":"

Advanced Micro Devices is preparing a big announcement today, Tuesday October 7, at 5 a.m. PDT.<\/p>\n

http:\/\/www.bloomberg.com\/apps\/news?pid=conewsstory&refer=conews&tkr=AMD%3AUS&sid=axKo70pBepvE<\/a><\/p>\n

Speculation is rampant that\u00a0AMD is going to cut costs by spinning off its manufacturing operations to a new joint venture that is mostly financed by investors associated with the government of Abu Dhavi.<\/p>\n

It appears likely that this announcement will\u00a0focus on the company’s structure and\u00a0it is possible\u00a0AMD will announce that\u00a0it will phase out its chip-fabbing plants to become completely\u00a0fabless instead.\u00a0 Asset lite<\/em> is what AMD has apparently been aiming\u00a0at for months, which means they will be spinning off\u00a0all<\/em> of their\u00a0manufacturing so they can focus completely\u00a0on design.\u00a0 If this is the case, it could lead to thousands of layoffs and the\u00a0closing of some sizeable AMD fabs facilities around the world\u00a0 So far, AMD\u00a0has been\u00a0desperately strapped for cash as its share price continues to plummet, making\u00a0it impossible for AMD to afford the massive\u00a0payoff it would be forced to\u00a0make if it were to shut down manufacturing.<\/p>\n

Speculation is\u00a0that AMD has secured more off-shore financing, possibly Abu Dhabi who\u00a0already\u00a0took an 8% percent stake last November.\u00a0 Hector Ruiz has already stepped down as CEO and\u00a0AMD is in\u00a0further need of\u00a0serious restructuring.\u00a0 Maybe they are taking that step.<\/p>\n

\u00a0<\/p>\n

We’ll know soon.<\/p>\n

\u00a0<\/p>\n

Stay tuned,<\/p>\n

Mark Poppin<\/p>\n

ABT Editor<\/p>\n

\u00a0<\/p>\n

UPDATE:<\/p>\n

It happened.\u00a0 AMD appeared to lose its opportunity to really explain what it was doing while it had the spotlight this morning and probably should have prepared its presentation better, considering they have evidently been working on this deal for over a year.\u00a0 The grist of the announcement is that AMD is going fabless as soon as possible. They are splitting into two companies; AMD will be concentrating on design and it will be splitting off a new company called The Foundry Company.<\/p>\n

Fabs are extremely expensive and AMD can no longer afford them since their acquisition of ATI.\u00a0 AMD’s rising debt and declining revenue has stopped their future expansion plans necessary to keep even with\u00a0Intel.\u00a0 Even worse, they are not recovering their investments on their current<\/em> fabs.\u00a0 The solution was for AMD to become asset-lite, <\/em>and with the infusion of billions of dollars from investors they can also modernize their facilities and even build a new fab in Albany, NY using some attractive tax breaks offered by that state.\u00a0 That last location may be an excellent choice as they hope to have the US government’s approval for this deal by the end of this year.<\/p>\n

Mubadala Development, representing the country of Abu Dhabi,\u00a0already made a large investment in AMD in 2007\u00a0and will again be making investment of almost $6 billion\u00a0in the new Foundry Company and into AMD.\u00a0 AMD will\u00a0have 44.4% of the new company and half of the voting rights.\u00a0 Hector Ruiz will be leaving AMD to become the Foundry Company’s new chairman, <\/span>which may be good news for AMD as it stagnated under his leadership.\u00a0 Once this spinoff is complete, AMD will be The Foundry Company’s first customer and although it is expected to begin to fab all CPUs, they may later expand\u00a0also to GPU and chipsets.<\/span><\/p>\n

Without a doubt, AMD has managed to secure its short-term future today – if it can secure approval from the US government.\u00a0 Whether\u00a0this is just a huge bandage or a long-term solution to their problems, remains to be seem.\u00a0 Without the spin-off, their\u00a0continued existance as AMD\u00a0next year was in doubt.<\/p>\n

We will continue to follow this story and update you as news happens.<\/p>\n


<\/p>\n","protected":false},"excerpt":{"rendered":"

Advanced Micro Devices is preparing a big announcement today, Tuesday October 7, at 5 a.m. PDT. http:\/\/www.bloomberg.com\/apps\/news?pid=conewsstory&refer=conews&tkr=AMD%3AUS&sid=axKo70pBepvE Speculation is rampant that\u00a0AMD is going to cut costs by spinning off its manufacturing operations to a...<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-711","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"http:\/\/alienbabeltech.com\/main\/wp-json\/wp\/v2\/posts\/711","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/alienbabeltech.com\/main\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/alienbabeltech.com\/main\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/alienbabeltech.com\/main\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"http:\/\/alienbabeltech.com\/main\/wp-json\/wp\/v2\/comments?post=711"}],"version-history":[{"count":0,"href":"http:\/\/alienbabeltech.com\/main\/wp-json\/wp\/v2\/posts\/711\/revisions"}],"wp:attachment":[{"href":"http:\/\/alienbabeltech.com\/main\/wp-json\/wp\/v2\/media?parent=711"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/alienbabeltech.com\/main\/wp-json\/wp\/v2\/categories?post=711"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/alienbabeltech.com\/main\/wp-json\/wp\/v2\/tags?post=711"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}