March 10, 2009 New name, same firm GlobalFoundries is company that plans to build Malta chip fab at cost of $4.2 billion
By LARRY RULISON, Business writer
First published in print: Wednesday, March 4, 2009
MALTA Here is the new name of the company planning a $4.2 billion computer chip factory in Malta: GlobalFoundries.
The company, a joint venture between Advanced Micro Devices Inc. and an Abu Dhabi investment fund, is unveiling the name and brand image today as it officially opens for business. It's what is known as a foundry, and will make chips for AMD and other customers.
AMD, which first proposed the factory in 2006, backed with $1.2 billion in cash and tax breaks from New York state, brokered the joint venture last fall in the face of mounting financial difficulties in its battle with No. 1 rival Intel Corp.
By spinning off its costly manufacturing operations, AMD is now able to focus exclusively on designing and selling chips.
Two funds owned by the oil-rich Emirate of Abu Dhabi, Advanced Technology Investment Co. and Mubadala Development Co., were involved in the deal. Mubadala invested $125 million directly in AMD, and ATIC took $1.1 billion in debt off AMD's books while pumping an additional $700 million in cash into the new GlobalFoundries venture.
The new company, which was formalized Monday with the closing of the deal between AMD and the two funds, now owns AMD's two chip fabs in Dresden, Germany. Previously, it had the temporary name of The Foundry Co.
GlobalFoundries intends to start construction this year of a third fab in Malta at Luther Forest Technology Campus that will employ 1,465 people.
The plant had been called Fab 4X, but under GlobalFoundries will be called Fab 2. The two Dresden fabs will be known collectively as Fab 1.
GlobalFoundries has already taken office space at Saratoga Technology & Energy Park in Malta, a state-owned energy research park that is nestled inside the Luther Forest park. A reception will be held there today with community leaders and company officials to showcase the new name.
Hector Ruiz, the former chief executive of AMD, is expected at the reception. Ruiz, who helped broker the deal with New York, is now chairman of GlobalFoundries.
Doug Grose, a Rensselaer Polytechnic Institute graduate who grew up near here, is CEO of the new company, which will be based in Silicon Valley.
In an interview Tuesday, Grose said that despite efforts to gain local permits for the construction of the new fab in Malta, the board of GlobalFoundries still must decide officially to move ahead with the project.
He said that should take place within the next 30 days. The company has until July 31 to notify New York state of its plans, in order to be eligible for the $1.2 billion in incentives. In documents filed with the town of Malta, AMD had said it wants to start clearing trees at Luther Forest later this month.
"We just want to be very prudent," Grose said. "I don't see any issues there."
Before Monday's completion of the deal, AMD had said the Malta chip fab would cost approximately $4.6 billion. But a spokesman for GlobalFoundries said the current cost estimate is $4.2 billion.
Grose said the Luther Forest fab would have the capacity to build not only x86 chips used in personal computers and servers, but graphics chips used for video games and chips used in handheld electronics such as cellphones. That would give the fab a much larger marketplace to serve than AMD had planned when it first proposed the plant.
AMD is the world's second-largest x86 chip maker behind Intel.
"I'm assuming New York is vibrating with the excitement," Grose said. "It's important that we leverage the known capability that is there. It's very critical to us."
