Thread: General PC news
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Old 11-10-2008, 11:13   #11
AMD sell off part of their fabrication business in order to try and remain competitive:

SAN FRANCISCO, Oct 7 (Reuters) - U.S. chip maker Advanced Micro Devices Inc plans to spin off its manufacturing plants into a $5.7 billion joint venture with Abu Dhabi to get a cash injection and shrink debt to better compete against larger rival Intel Corp.

AMD shares jumped 18 percent to $5 on Tuesday after Wall Street waited for months for the struggling chip maker to formulate its so-called "smart asset" strategy to focus more on chip design and less on costly factories.

Advanced Technology Investment Company (ATIC), an Abu Dhabi state-owned venture capital firm, said it will invest $2.1 billion for a 55.6 percent stake in the venture, of which $700 million will go directly to AMD, which will hold the remaining stake. The two will divide the venture's board seats equally.

ATIC also committed to investing another $3.6 billion to $6.0 billion over 5 years to fund the venture's expansion. The 3,000-person new company will hold AMD's two plants in Dresden, Germany and make all of its central processing units, as well as chips for other companies.

Another Abu Dhabi government company, Mubadala Development Co, will spend $314 million to increase its stake in AMD to 19.3 percent from 8.1 percent and gain a seat on AMD's board.

Brian Mata, an analyst at IC Insights in Arizona, said AMD desperately needed the boost. The company has posted seven consecutive quarters of losses and is forecast by Wall Street to report another quarterly loss next week.

"The key thing is the financial backing from Abu Dhabi because AMD was essentially out of money," said Mata.

He said AMD can focus on design and has the money to try to catch up with Intel, but the new venture has a challenge competing with existing contract chip manufacturers.
More here:

Hope it works. Intel need strong competition or prices will rocket.
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