http://www.bloomberg.com/apps/news?pid=20601087&sid=aw2EzHFTix4s&refer=homeBy Ian King
Oct. 6 (Bloomberg) -- Advanced Micro Devices Inc., the money-losing chipmaker struggling to compete with Intel Corp., will spin off its manufacturing plants as part of an $8.4 billion investment from the Abu Dhabi government.
Abu Dhabi will pay AMD $700 million for a stake in a new company that will own two plants in Germany and build a factory in New York. The new company, which will assume $1.2 billion of AMD's debt, will receive as much as $6 billion from Abu Dhabi to expand plants and get $1.4 billion in operating capital. Abu Dhabi will also pay $314 million to double its stake in AMD to 19 percent, AMD said today in an e-mailed statement.
The cash infusion is a lifeline for AMD, which is forecast to report a third straight annual loss this year and is falling behind on investments needed to keep up. Intel spends more on plants and research than AMD makes in annual revenue. Abu Dhabi is building on a 2007 investment as it seeks a foothold in the technology industry.
``It will make AMD financially strong and more tightly focused,'' AMD Chief Executive Officer Dirk Meyer said in a telephone interview.
The new company, called Foundry Co., will make processors for AMD and seek contracts from other companies, while AMD will continue to design and market chips. That structure means AMD can develop new products without having to invest billions of dollars in plants, said Meyer, who took over as CEO in July.
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