Absolutely Fabless
by John Paczkowski
Posted on October 7, 2008 at 7:11 AM PT
If it’s true that “real men have fabs,” as Advanced Micro Devices Inc. Chairman W. J. “Jerry” Sanders III (at right in Indiana Jones drag) once said, then AMD is the semiconductor industry’s latest eunuch. This morning the chipmaker said it will spin off its manufacturing operations, splitting itself into two companies–one to design chips and one to make them. The new manufacturing company, called Foundry Co., will be a joint venture between AMD and two Abu Dhabi investment firms–Mubadala Development Co. and Advanced Technology Investment Co.–that have agreed to provide it with some $6 billion in financing to build a new chip fabrication plant, or fab, in upstate New York and upgrade one of two AMD fabs near Dresden, Germany.
A bold move for AMD (AMD), which has sustained seven straight quarters of losses, and one that could dramatically alter its fortunes. Indeed, right off the bat, AMD will push $1.2 billion in debt off its books and onto those of the The Foundry Co. “This is the biggest announcement in our history” said CEO chief executive, Dirk Meyer. “This will make us a financially stronger company, both in the near term and in the long term, as a result of being out from the capital expense burden we have had to bear.”
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