AMD Splits in Two as It Unveils Its "Asset Smart" Plan

AMD has been talking about its "asset smart" plan for over a year now, and AMD finally revealed what it means on Tuesday. AMD is going to shed its chip-manufacturing operations, spinning off that part into a new company, called (at least for now) The Foundry Company.

AMD will continue to own 44.4% of the new company, while Advanced Technology Investment Company (ATIC) of Abu Dhabi owns the rest. At the same time, Mubadala Development Company, which invested approximately $622 million in AMD last November and which currently owns 8.1% of AMD, gained a seat on the board and increased its stake in the company to 19.3% with the purchase of 58 million newly-issued AMD shares for $314 million. It also received warrants to purchase 30 million additional shares.

Hector Ruiz will leave his current role as AMD’s executive chairman and chairman of the board to become chairman of The Foundry Company, and Doug Grose will relinquish his role as AMD’s senior vice president of manufacturing operations to become CEO of The Foundry Company.

AMD expects the deal to close in early 2009.

So, is a fabless AMD simply fabulous? That's probably a question for financial analysts. But it was clear the the capital-intensive operations of running their own FAB plants was wearing on AMD.

AMD’s President and CEO, Dirk Meyer, said that the combination of the manufacturing spin-off and Mubadala increased investment would “result in a stronger and more tightly focused AMD.”