Microchip manufacturer Advanced Micro Devices has officially committed to building its proposed $4.5 billion manufacturing plant in Malta, according to an announcement made Tuesday, Oct. 7. It will be doing so with a new structure, however.
Along with news of AMD’s commitment came a plan to split the company into two divisions, one dedicated to designing microchips and the other to manufacturing them. The spinoff company is being called the Foundry Company. The decision was called the biggest announcement in our history by AMD’s CEO, Dirk Meyer.
The cost of the facility increased from $3.2 billion because its size was scaled up from the original plans during negotiations with the Town of Malta.
In order to build the new Malta plant and upgrade similar facilities in Dresden, Germany, the chipmaker will be relying on $6 billion from two Abu Dhabi investors. Foundry will be run by both AMD and the Abu Dhabi Advanced Technology Investment Company, which will be supplying most of the cash.
The announcement comes amid dire financial times for AMD, which in the past year has seen several rounds of layoffs and currently reports a $5.3 billion debt. Many speculate the new business plan comes with the hopes of catching up to their competitor, Intel.
AMD is expected to gain some financial health back as Foundry assumes $1.2 billion of its debt. The Abu Dhabi investor Mubadala ` which bought 8 percent of AMD last November and is owned by the government of Abu Dhabi ` will also be contributing capital by increasing its stake in the pre-split AMD to 19 percent.
The chipmaker will be receiving some help from New York state as well, in the form of a $1.2 billion incentive package. AMD’s construction in Malta is contingent on the transfer of those funds. The plant is expected to bring 1,465 jobs to the region and stimulate growth and job creation in Saratoga County.
Town of Malta Supervisor Paul Sausville acknowledged the investment made at various levels, including the $67 million Saratoga County waterline project, which will sell 3 million gallons of water a day to the plant, but said that the hard work is now paying off.
`It’s a culmination of effort from a lot of different people working at the state, county and local level,` Sausville said of the announcement, adding that the plant represents a step toward prosperity in the area. `It’s going to provide great jobs for young people so they don’t have to move away.`
Elected officials, their challengers in upcoming elections, the Saratoga Chamber of Commerce and even realtors throughout the area and state released declarations of support for AMD’s decision on Tuesday.
`At a time of general bleak economic news, this is great news about the Capital Region and its economic future,` said Democratic Sen. Charles Schumer.
`Not only will the Fab 4X project inject billions of dollars and thousands of jobs into our economy, it will generate new research and development opportunities for our universities, attract other companies to locate in our communities, and help our existing small- and medium-sized businesses grow and prosper,` said Kirsten Gillibrand, D-Hudson.
AMD’s stock reacted positively to the news by spiking sharply as Tuesday’s trading opened. On a day the Dow plummeted over 500 points the stock settled down and finished at $4.59, a 36 cent gain. That’s one-third of what it was worth at this time last year. Intel’s stock dropped 5.4 percent.“
