Troubled chipmaker AMD is to separate into two companies, it announced today. One company – that keeps the AMD name – will focus on chip design, while the other will be a chip manufacturing business.

The manufacturing arm, which bears the temporary name of the ‘The Foundry Company,’ will expand its fabrication resources by building a new plant near New York. It will continue to manufacture AMD’s chips, but also build chips for other designers.

The deal is backed by two Abu Dhabi-based investment funds which are poised to put $6 billion into the two companies. AMD will own 44% of the Foundry Company; the rest will be owned by Advanced Technology – a company set up by the Abu Dhabi government. Meanwhile, the Mubadala Development Company – another Abu-Dhabi investment vehicle – will expand its investment in AMD to 19.3%.

“Today is a landmark day for AMD, creating a financially stronger company with a tightened focus,” said Dirk Meyer, president and chief executive officer of AMD. “With The Foundry Company, AMD has developed an innovative way to focus our efforts on design while maintaining access to the leading-edge manufacturing technologies that our business needs without the required capital-intensive investments of semiconductor manufacturing”

The strategy, which has long been rumoured, was the brainchild of former CEO and current chairman Hector Ruiz. Ruiz resigned as CEO earlier this year following a dismal set of financial results from the company’s seventh consecutive loss-making quarter.

Further reading

AMD removes CEO after shocking financial results
Hector Ruiz steps down as chief executive at number two chipmaker following disastrous quarter