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AMD to split into two companies

by Scott Bicheno on 7 October 2008, 08:37


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Asset smart

The New York Times is reporting today that AMD will be spinning off its manufacturing operations into a new venture in partnership with an Abu Dhabi investment company called Advanced Technology Investment Company (ATI!! Perhaps ATIC is better).

The new venture is reportedly going to be called Foundry Company, for now at least and will be 44.4 percent owned by AMD. AMD is expected to continue to manufacture its chips in these fabs (fabrication plants), as well as a new one expected to be built in New York state.

This is the long awaited arrival of AMD's "asset smart" strategy of freeing up some cash from some of its manufacturing assets. When CEO Dirk Meyer took over in July of this year he said he was prioritising asset smart and it looks like he was true to his word.

AMD's balance sheet has been on the unhealthy side ever since it bought ATI a couple of years ago. It keeps having to write down the value of that deal and has consistently announced quarterly losses since.

The broad thinking behind asset smart is to free up funds to allow AMD to continue to compete with Intel and NVIDIA, while still exercising some control over the manufacturing side of things.