Micro-Processing Now in Emirate Hands

American semiconductor and micro-processor manufacturer Advanced Micro Devices Inc. has struggled to keep up with industry giant Intel as the cost of owning its own chip manufacturing factories continues to increase. In hopes of shoring itself up for future costs, the company has turned to the government-operated Mubadala Development Company of Abu Dhabi, according to The Washington Post.

The deal is intricately complicated and involves several partners. Primary among these is Advanced Technology Investment Co.; a corporation which is also backed by Mubadala. The partnership of AMD and ATI will produce Foundry Co., a large operation with 3,000 employees in Silicon Valley, Austin, Texas and Dresden, Germany. There are also plans to build a new factory in Saratoga, New York.

The new company – Foundry – will be 44.4 percent owned by AMD and 55.6 percent owned by ATI. The problem is that both AMD and ATI will be, upon the conclusion of this deal, financially underwritten by Mubadala out of Abu Dhabi. Mubadala even plans to build processor manufacturing facilities in the emirate in the near future. When faced with increasing pressure from the untouchable Intel Corporation, both AMD and ATI have sold out to foreign interests in their desperate search for capital and financial backing.

While the government spends hundreds of billions of dollars bailing out investment banks, Wall Street brokerages and notoriously inept automakers, it has allowed backbone high-technology industries to falter unprotected. Every company sold to a foreign holder or managed by a foreign partner represents a lost profit for the U.S. economy. Foreign acquisitions are unbearable not due to some xenophobic paranoia, but because each represents the loss of yet another wealth producing company.

AMD was unable to keep up in the microchip arms race with Intel Corporation – which is nearly 30 times the size of AMD and carries nearly 80 percent of the processor market – and it was equally unable to find suitable domestic partners. It is now in the hands of Abu Dhabi-based Mubadala and will likely remain so into the future.

On the surface, the transaction appears to be a domestic merger. Make no mistake about it, by controlling the “purse strings” – and by putting a representative on the newly created Foundry board of executives – Mubadala has positioned itself to oversee the operation. With cash reserves overflowing from record oil prices, nations like Abu Dhabi are using their new-found wealth to purchase established firms, thereby positioning themselves to reap future benefits.

With so much money already flowing overseas to oil-rich nations in the Middle East, the last thing the U.S. needs is to lose a champion of high-technology to a far-removed region of the world.

Source Washington Post:

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