Advanced Micro Devices (AMD) and the Advanced Technology Investment Company (Atic) of Abu Dhabi have announced the creation of a US-headquartered, leading-edge semiconductor manufacturing company to address growing demand for independent, leading-edge foundry production capabilities.

The new global company, to be temporarily called The Foundry Company, will serve this need by combining advanced process technology, industry-leading manufacturing facilities and aggressive plans to expand its global capacity footprint. At the same time, the Mubadala Development Company will increase its current investment in AMD to 19.3 per cent on a fully diluted basis.
The Foundry Company will join the IBM joint development alliance for both silicon-on-insulator (SOI) and bulk silicon through the 22 nm generation. The alliance consists of a group of leading semiconductor companies collaborating on next-generation silicon technologies.
In the long term, the new company may consider setting up a manufacturing facility in Abu Dhabi if commercially feasible.
AMD will contribute to The Foundry Company its manufacturing facilities, including two fabrication facilities in Dresden, Germany, as well as related assets and intellectual property rights. Atic will invest $2.1 billion to purchase its stake in The Foundry Company, of which it will invest $1.4 billion directly in the new entity and the remainder will be paid to AMD to purchase additional shares in The Foundry Company.
The Foundry Company will also assume approximately $1.2 billion of AMD’s existing debt. Atic has committed additional equity funding to The Foundry Company of a minimum of $3.6 billion and up to $6.0 billion over the next five years to fund the expansion of The Foundry Company’s chip-making capacity beyond the manufacturing facilities initially contributed by AMD.
These funds will be used by The Foundry Company to proceed with capacity expansion at its fabs in Dresden, Germany, including an upgrade of one of its fabs to a state-of-the-art facility, and also to begin construction on a new state-of-the-art facility in Saratoga County, New York, subject to the transfer of previously-approved New York State incentives. The New York facility is expected to create more than 1,400 direct jobs, and, through its operation, to generate an additional 5,000 jobs in the region. Once operational, the New York facility will be the only independently-managed, leading-edge semiconductor manufacturing foundry in the United States.
Global demand for independent foundry manufacturing is growing because leading semiconductor companies are exiting manufacturing, as the cost and complexity increases and capital and research and development costs have become too high. In addition, the world’s requirements for devices that use more advanced semiconductors continue to grow, and the IBM technology alliance, to which The Foundry Company will belong, creates an increasingly larger foundation for semiconductor innovation.
The board of directors of The Foundry Company will be equally divided between representatives of AMD and Atic. AMD will own 44.4 per cent and Atic 55.6 per cent of The Foundry Company’s fully-converted common stock upon its formation.
Doug Grose will relinquish his current role as AMD’s senior vice president of manufacturing operations to become CEO of The Foundry Company. Hector Ruiz will relinquish his current role as AMD’s executive chairman and chairman of the board to become chairman of The Foundry Company.
Atic is an investment company formed by the government of Abu Dhabi to invest in advanced technology opportunities that require patient capital and long-term time horizons to achieve economic returns while also increasing the economic diversification of Abu Dhabi. While it enhances its capabilities specific to the transaction, Atic will enter into a 12-month agreement with Mubadala to project manage Atic’s interest in The Foundry Company.
As a result of the transactions, AMD will strengthen its financial position and focus on the design and development of innovative computing and graphics solutions. It will improve its liquidity through The Foundry Company’s assumption of approximately $1.2 billion in debt, Atic’s $700 million payment to AMD for ownership interests in The Foundry Company and Mubadala’s $314 million paid to AMD for 58 million newly issued AMD shares and warrants for 30 million additional shares.
Mubadala, an existing 8.1 per cent AMD shareholder, will increase its stake to 19.3 per cent of outstanding AMD shares on a fully diluted basis. This will be accomplished through the purchase for $314 million of 58 million newly issued AMD shares and warrants for 30 million additional shares. Mubadala will also have the right to appoint a designee to AMD’s board of directors.
Dirk Meyer, president and CEO of AMD, described the developments as a “landmark” for AMD. “With The Foundry Company, AMD has developed an innovative way to focus our efforts on design while maintaining access to the leading-edge manufacturing technologies that our business needs without the required capital-intensive investments of semiconductor manufacturing,” he added.
Khaldoon Al Mubarak, CEO and managing director of Mubadala, said the increased investment was a strong vote of confidence in AMD’s “asset smart business strategy, evolved leadership team, and best-in-class technology.”
Ruiz, chairman of AMD’s board of directors who will become chairman of The Foundry Company, noted that Atic and AMD were the ideal partners with which to create the new company.
Atic chairman Waleed Al Mokarrab said the announcement significantly reshaped the global semiconductor industry as it was an investment where all parties saw significant opportunity. He added that the foundation was being laid to make the new company a clear leader in global semiconductor manufacturing.”
Grose, who will be its CEO, said the new company with IBM as collaborator “would aspire to drive the next round of innovation in this industry.”
Upon closing of the transaction, The Foundry Company will commence operations with approximately 3,000 employees who will transition into the new company from AMD facilities in Silicon Valley, New York, Dresden, and Austin. The new company’s principal headquarters will be in Silicon Valley and its research and development and manufacturing leadership teams and ecosystems will be based in New York, Dresden, and Austin. After the upgrade and expansion in Dresden and the build-out of the New York facility, The Foundry Company envisions expanding its global manufacturing footprint over time, if commercially justified, to also include new fabrication facilities in Abu Dhabi.