QUICKSTART^
THE BEGINNING OF THE MAGAZINE, WHERE ARTICLES ARE SMALLA
ft er being thoroughly trounced in
recent years by Intel and Nvidia
in the CPU and GPU markets,
respectively, it was clear AMD had to do
something drastic. A recently announced
spin-off of the chipmaker’s fabrication
division appears to be AMD’s Hail Mary.
Under a deal announced in October,
AMD will split into two separate entities:
a CPU and GPU design company keeping
the AMD name and a fabrication company,
temporarily called The Foundry Company.
Enabling this move? Cold hard cash,
and lots of it, from two companies ownedby the government of Abu Dhabi, one
of the United Arab Emirates. The first,
Mubadala Development Company, is
paying more than $300 million to obtain
a 19.3 percent share of AMD. The second,
Advanced Technology Investment Com-
pany, is ponying up $2.1 billion for 55
percent of The Foundry. The money willgo toward decreasing AMD’s debt, part
of which is transferring to The Foundry.
In addition, ATIC will contribute $3.
to $6 billion more for renovations and
new construction on AMD’s fabs (now
transferring to The Foundry) in Dresden
and New York. AMD and ATIC will have
equal voting control over The Foundry.
Bold moves. But will the AMD split be
the kick in the pants the company needs
to remain a serious competitor to Intel?
“Absolutely,” says technology analyst
Rob Enderle. “Most analysts were guess-
ing that AMD would be out of businessin 24 months. AMD needed an investor
who didn’t need a quarterly payback—
someone who was willing to invest in
the future. Oil money becomes one
of the few places you can get funding
for something like that.” ATIC’s stated
goal, after all, is to generate long-term
revenue for Abu Dhabi—all that oil won’tlast forever, and the Emirate is looking to
other sectors for growth.
Microprocessor research and develop-
ment is enormously expensive—it costs
hundreds of millions before the first
production chip ever rolls off the line.
Factories cost money. Dies cost money. It
can be years before a company sees any
return on its investment. AMD needed to
“get creative, fast” said Enderle.
But the deal is by no means guar-
anteed to go through. One potential
roadblock: Intel is making noise to the
effect that the split violates the terms of
AMD’s x86 license, since AMD won’t be
physically producing its chips anymore.
Without that license, AMD would have
trouble operating.
While the version of the agreement
we’ve seen is redacted, Rob Enderle
noted that due diligence would have
required full disclosure to the investors.
The fact that they approved the split
suggests that AMD thinks it has a pretty
strong case.
If the deal is approved, AMD will get
the resources it desperately needs to stay
competitive with Intel and Nvidia, which
can only benefit consumers.THE NEWS
Company spins off fabrication unit to reduce debt,
increase options —NATHAN EDWARDS
AMD Does the Math
THE NEWS
AMD Does the Math
THE NEWS
“MOST ANALYSTS WERE GUESSING THAT AMD
WOULD BE OUT OF BUSINESS IN 24
MONTHS.... IT NEEDED TO GET CREATIVE, FAST.”10 |MAMAMAXIMXIMXIMXIMUUUUMMPPPCC| HOLIDAY 08 | http://www.maximumpc.com
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