Intel's major rival, semiconductor maker Advanced Micro Devices Inc (AMD) has announced amendments to its joint venture agreement with Abu Dhabi government-owned Advanced Technology Investment Co., (ATIC) and Mubadala Development Co, signed in October this year.
Under the amended deal, AMD will now own a reduced 34.2-per cent stake and ATIC around 65.8-per cent stake in the newly created The Foundry Co's fully-converted common stock.
However, AMD and ATIC will each have equal voting rights at the close of the transaction.
Previously, ATIC was to hold 55.6 per cent of Foundry upon completion, while the remaining 44.4 per cent stake would be owned by AMD.
While the amendment will result in ATIC getting a bigger stake in the newly formed joint venture company, Mubadala will still purchase 58 million AMD shares as part of the deal, but it will do so at a revised stock price: either the average for the 20 days leading up to and including 12 December or the average in the 20 days before the deal closes, whichever is lower.
AMD will also issue to Mubadala an additional 5 million warrants to purchase AMD stock, for a total of 35 million warrants.
The transactions covered by the amended deals are expected to close at the beginning of 2009.
The Foundry Co. will manufacture computer chips for several semiconductor firms.
This amendment comes after AMD issued a warning on 4 December that it expected a 25-per cent sequential decline in fourth-quarter revenues, due to the weaker-than-expected demand across all geographies and businesses, particularly in the consumer market.
The amendment is also due to the fact that the value of AMD assets being contributed to the joint venture with Abu Dhabi investment entities have been reduced, cutting AMD's stake in the venture to 34 percent from its original take of 44 percent.
In November AMD had assured that it would not change its fourth-quarter revenue guidance, projected to be flat from last year.
Under the deal entered into in October AMD had agreed to spin off its manufacturing facilities into a new $5 billion joint venture to ATIC, to create a leading-edge semiconductor manufacturing company "The Foundry Co." At the same time, Mubadala, the investment arm of Abu Dhabi, agreed to invest $314 million in the new entity.
Under the October deal AMD would have contributed its manufacturing facilities, to the new company. These included two fabrication facilities in Dresden, Germany, as well as related assets and intellectual property rights.
The new entity is expected to address the growing demand for independent, leading-edge foundry production capabilities.
The deal is still expected to close at the beginning of 2009.