AMD Ditches Fabs to Stay Alive

It’s been a long time coming, but AMD said this morning that it has entered into a transaction with the Advanced Technology Investment Company of Abu Dhabi to create an independent semiconductor manufacturing foundry called The Foundry Company. As part of the spin-out of AMD’s fabrication plants into this separate entity, AMD raised $1 billion in capital and got rid of about $1.2 billion in debt.

The move has been anticipated for over a year, as AMD has struggled to stay afloat amid production delays and brutal pricing from rival Intel. Last quarter, it reported a $1.2 billion loss. AMD finally had to admit it couldn’t keep up with the costs of building a $3 billion-$4 billion fab each time it wanted to shrink its chips and gain some economies of scale in manufacturing. That’s a business model that has moved on. Now most companies have created manufacturing partnerships, or are fabless, meaning they outsource the building of their chips to a third party. Read More about AMD Ditches Fabs to Stay Alive