x Abu Dhabi, UAETuesday 23 January 2018

US clears AMD and Mubadala capital deal

The transaction that will see Abu Dhabi become the world's second-largest manufacturer of computer chips.

American regulators have approved a transaction that will see Abu Dhabi become the world's second-largest manufacturer of computer chips. The Committee on Foreign Investment in the United States (CFIUS), a government body that reviews foreign investments for possible security implications, has cleared a deal between the American chipmaker, AMD, and Abu Dhabi's Mubadala Development.

Foreign takeovers of US technology firms, particularly those that involve the transfer of knowledge gained from advanced scientific research, have historically been an area of particular interest for the committee. The CFIUS last played a prominent role in a transaction between the UAE and US when it approved the takeover of a handful of American ports by Dubai's DP World in early 2006. However, following high-profile protests in the US by politicians and media following the approval, DP World chose to sell the assets to a division of the now nationalised AIG insurance group.

Last October, Mubadala announced it would more than double its stake in AMD to almost 20 per cent and acquire the company's manufacturing operations, which will be spun off into a new business tentatively named The Foundry Company. People familiar with the deal said that with CFIUS approval the transaction would be finalised later in the month. In December, just months after the agreement was announced, revisions were made that gave Mubadala an increased stake in The Foundry Company.

It will also pay less for the additional stake in AMD. The revisions followed a collapse in AMD's share price, which dropped by more than half in the two months following the initial deal. AMD plans to use the injection of capital and the new relationship with Mubadala and The Foundry Company to compete more vigorously in the global market for computer chips and semiconductor products. The company is currently dwarfed in sales and research-and-development efforts by its far larger competitor, Intel. This week, it launched a new line of chips aimed at the increasingly popular segment of small, lightweight, low-cost computers known as netbooks. The line of chips, called Yukon, offer better performance than other low-cost chips, but at a slightly higher price.