MALTA — Advanced Micro Devices Inc. says its $7.2 billion deal with the Emirate of Abu Dhabi to spin off manufacturing is structured to preserve a long-standing technology-sharing agreement with rival Intel Corp.
The agreement, which has been in place since the 1970s, is vital to AMD's long-term success, as well as to its plans to build a $4.6 billion computer chip factory at Luther Forest Technology Campus in Malta.
Some analysts also question whether the Intel agreement poses a risk to the Abu Dhabi deal. The Sunnyvale, Calif., company is spinning off two chip fabs in Germany into a new entity called The Foundry Co. that will make microprocessors for AMD and other companies. Foundry is planning to build the Luther Forest fab as well.
Essentially, AMD says its agreement with Intel can be extended to AMD's subsidiaries, and technically, Foundry will be treated as an AMD subsidiary.
"We are completely confident the structure of this transaction takes into account our cross-license agreements," AMD spokesman Travis Bullard said.
Under the language of the 2001 agreement, a subsidiary is defined as an entity that is at least 50 percent controlled by AMD.
Foundry will be 44.4 percent owned by AMD and 55.6 percent owned by Advanced Technology Investment Co., an investment fund owned by Abu Dhabi.
However, Foundry's board of directors will be equally split between representatives from AMD and ATIC, which AMD officials say satisfies the definition of subsidiary.
Also, the Intel agreement says that a subsidiary is defined as an entity that distributes no more than 70 percent and no less than 30 percent of its profits to AMD.
Under the agreement with Abu Dhabi, AMD will get 45 percent of Foundry's profits, meaning Foundry falls well within the guidelines for being an AMD subsidiary.
Intel spokesman Chuck Mulloy, asked on Friday if AMD's explanation was satisfactory, said "We certainly need to learn more. We may need to ask AMD some questions, too. But we're not in a position to block (creation of Foundry). We'll continue to do our research."
Source : http://timesunion.com/
