AMD cuts its fabs loose on the second try

AMD on Wednesday finally got stockholder approval to spin off its fabrication plants as a separate company, called The Foundry Company, but it wasn’t easy.

Only 42 percent of common stock shareholders showed up for the first vote in Austin, Texas, on February 10. AMD’s bylaws mandate that 50 percent or more shareholders be present to
constitute a quorum for business. So the company delayed the vote until February 18. This time they got their 50 percent and the vote passed.

The transaction is expected to close by March
2, 2009. According to the press release, AMD will issue 58
million shares of the company’s common stock and warrants to purchase 35
million shares of its common stock and (ii) 35 million shares of the company’s
common stock upon exercise of those warrants to an affiliate of the Mubadala
Development Company PJSC.

So now AMD’s fabs will have the expense of doing their own upgrades to keep pace with Intel, TSMC and countless Asian fabrication companies. Even with the new Abu Dhabi investments, keeping pace with Intel won’t be easy. It just announced a $7 billion investment in 32nm manufacturing. AMD is just getting to 45nm, although it is allied with IBM, which does have 32nm in the works for next year.

As if competing with Intel and the Asian fabs wasn’t enough, The Foundry Company is also starting up just as the chip market screeched to a halt and the need for manufacturing has plunged. TSMC has cut production by up to 30 percent in recent months.

News Around the Web