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AMD Spins Off GlobalFoundries Chip Making Unit

GlobalFoundries is expected to start manufacturing next-generation 32-nanometer processors by the middle of next year.
AMD owns a 34.2% share of GlobalFoundries, with ATIC, formed by the Abu Dhabi government, holding the remaining stake. The spin-off deal was crucial in getting more than $1 billion in debt off of AMD's books, while also bringing an $825 million cash infusion.

In switching from a manufacturer to a design-only company, AMD hopes to reverse a string of quarterly losses that have amounted to several billion dollars. In January, the company reported a loss of $1.4 billion in the fourth quarter of last year.

In officially opening for business, GlobalFoundries, which also plans to make chips for companies other than AMD, is entering a market that has been crippled by the economic recession. The semiconductor industry this year is expected to see a near-record revenue decline of 24.1% from 2008 before returning to growth in 2010, according to Gartner.

Doug Grose, formerly senior VP of manufacturing operations at AMD, has been named chief executive of GlobalFoundries, with Hector Ruiz, former executive chairman and chairman of the board at AMD, appointed chairman. Bruce McDougall, former CFO of EMAL, is CFO. EMAL is an aluminum smelting and power plant project under construction in the United Arab Emirates, which is building the facility in partnership with Mubadala Development.

GlobalFoundries is a member of IBM's alliance of chip manufacturers that pool resources for research and development. Through AMD, GlobalFoundries has a technology agreement with IBM that it has extended to 2015. The alliance is currently working on 22-nm manufacturing processes.

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