x Abu Dhabi, UAEMonday 24 July 2017

ATIC increases stake in Globalfoundries

The Advanced Technology Investment Company has increased its stake in Globalfoundries, a producer of customised microchips.

The Advanced Technology Investment Company (ATIC) has increased its stake in Globalfoundries, a producer of customised microchips.

ATIC now owns 86 per cent of Globalfoundries, with Advanced Micro Devices (AMD), the chip maker's former owner, holding the remaining stake, according to a company filing.

ATIC, an investment firm owned by the Abu Dhabi Government, purchased a 65.8 per cent stake in Globalfoundries last year for US$2.1 billion (Dh7.71bn) in a deal that made the UAE a leading player in the global microchip industry.

ATIC later purchased Singapore's Chartered Semiconductor for S$5.6bn (Dh15.85bn), making Globalfoundries the world's third-largest semiconductor foundry by revenue.

ATIC has pledged about $10bn of investment to Globalfoundries, with $3.6bn set aside to expand its facilities in New York and Germany and the rest going towards building a foundry in Abu Dhabi.

In a filing to the US Securities and Exchange Commission yesterday, AMD said ATIC's investment in Chartered Semiconductor had diluted its stake in Globalfoundries to 14 per cent.

ATIC transferred all the outstanding ordinary shares of its investment in the Singaporean firm to Globalfoundries in exchange for more than 2.8 million Class "A" preferred shares.

AMD said the dilution of its equity in Globalfoundries would result in a non-cash gain in the first fiscal quarter of next year.

The company also said it would begin accounting for its investment in Globalfoundries using the "cost method" and would no longer recognise any financial contribution of the chip maker in its statements of operations.

"ATIC bought Chartered Semiconductor one year ago to integrate it into Globalfoundries, offering the industry a truly global foundry company," said Brian Lott, the executive director of communications for ATIC.

"Customer response has been extremely positive, reinforcing this strategy and already creating demand for expansion."

Mr Lott said ATIC did not intend to acquire all of Globalfoundries. "It is not in our present plans," he said. "ATIC intends to remain share partners with AMD in Globalfoundries."

Abu Dhabi plans to build a $6bn microchip foundry near Masdar City that should be operational around 2015. It will contribute up to $4bn to the capital's economy and create up to 6,000 jobs over the next 10 years, industry officials say.

Globalfoundries, a private company that does not have to report financial figures, is expected to post revenues of $3.5bn this year and executives expect it to outperform the global semiconductor industry next year.

According to the technology research company Gartner, global semiconductor revenue will be about $300.3bn this year and will grow by about 4.6 per cent to $314.25bn next year.