There have been times when Abu Dhabi's foray into the semiconductor industry looked like a bad idea. When the state-owned Mubadala Development doubled its stake in the US chip maker Advanced Micro Devices (AMD), the stock fell continuously for months, reaching a low last January when the price Mubadala paid for a 20 per cent stake could have bought it a majority. Meanwhile, another Abu Dhabi Government fund was ploughing billions into Globalfoundries, a joint venture with AMD that would compete with the semiconductor giants of Taiwan and South Korea. Many analysts questioned whether it could.
How things have changed. Intel, AMD's main competitor, has been stung by anti-trust rulings in Europe and is facing a similar investigation in the US. It paid AMD US$1.25 billion (Dh4.59bn) to settle a series of long-running disputes and AMD's stock has risen fivefold in the past year. It is now one of the best performing big-cap shares in the world. And for Globalfoundries, things are taking shape.
It has significantly boosted its scale, resource base and talent pool with the acquisition of the Singapore-based Chartered Semiconductor, and there is no bigger nor more promising customer than its latest signing, Qualcomm. The leaders of Abu Dhabi's push into the chip business have always stressed that it was a long-term play. During the dangerous lows of last year, the long term was all that seemed promising. Today, things are getting better sooner than many could have imagined.