AMD posts loss after Abu Dhabi write-down
World’s second largest chip maker writes-down $209m in Globalfoundries investment following supply issues
Chip maker AMD swung to a loss of $177 million in 4Q2011 following a $209 million write-down of its investment in Globalfoundries, a semiconductor manufacturer majority-owned by Abu Dhabi's Mubadala Development Company.
Globalfoundries, one of AMD's key manufacturers of semiconductors, was subject to an $8 billion cash injection from Mubadala last year. The company soon after announced a proposal to build a major factory in the UAE capital, but the plan was delayed in November.
"They have changed the time line on the new [factory] in Abu Dhabi," AMD CEO Rory Read told investment analysts during a conference call. "Their business plans have changed, and we re-evaluated our investment in the company." Read added that at the start of 2011, AMD had valued its investment in Globalfoundries at $460 million.
During the quarter, AMD decreased its investment in Globalfoundries to 8.8%, but Read said the company would "continue to build on the strong relationships that [AMD] has been developing with Globalfoundries as we move forward". He added that supply volumes of Globalfoundries' 32-nanometer chips were improving.
Globalfoundries was owned by AMD until 2009, when it was spun-off as a separate entity. However, Globalfoundries remains a key supplier for AMD along with Taiwan Semiconductor Manufacturing Corp.
The Globalfoundries impairment was not the only hit the chip maker took during the three-month period closing 31 December. AMD, the world's second largest seller of micro processors, also paid out $98 million in restructuring charges following its announcement during the quarter that it would be cutting 10% of its workforce.
On a global basis, the vendor's revenue during the quarter rose 2.2% year-over-year to $1.69 billion and remained flat at $6.57 billion for the full year.