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AMD Ditches the Costly Chip Manufacturing to Focus on Design

The media this morning is busy working itself into a frenzy about an announcement from AMD scheduled for early Tuesday.

A notice went out Monday night informing the press and media analysts that AMD would be making a “significant corporate announcement” today at 8:00 a.m. EDT. While the email didn’t reveal much of what we can expect other than “prepared comments” from CEO Dirk Meyer and a few other executives, followed by a questions and answers session for media analysts, a press release sent early this morning confirms suspicions that today’s conference call will be a formal confirmation that the company plans to spin off it’s expensive chipmaking business and instead focus on microprocessor design.

AMD has been struggling for quite a while and now, under new leadership from CEO Dirk Meyer, the winds of change are expected to solve some of the cashflow problems the company has been having as of late. The winds of change, in this instance, come in the form of an investment from two Abu Dhabai firms amounting to at least $6 billion. The money will shrink AMD’s debt and see the company spin off chip manufacturing to a second company run by former AMD CEO, Hector Ruiz.

The new chipmaking company will operate under the name the Foundry Company for now and will be 44.4 percent owned by AMD with the rest owned by Advanced Technology Investment Company. The Foundry Company is currently planning a factory in upstate New York, which will employ a staff of 1,400. As part of the plans, the company’s factory in Dresden, Germany will also be upgraded.

AMD CEO, Dirk Meyer, said in a statement that the decision to spin off chipmaking was about improving finances and creating a company with a tightened focus. The company hopes that rethinking the structure of the company will give AMD a second wind in competing against rival, Intel.

We’ll bring you more following the conference call and Q&A with Dirk Meyer and the other big wigs at AMD.