AMD to spin off chip fabs to raise funds

Analysts welcomed AMD's announcement.

"It will be able to concentrate its resources on product design, allowing it to focus on delivering products that are consistently competitive with those of Intel," said John Spooner, senior analyst with Technology Business Research.

The deal will allow AMD to participate in an entirely new business -- a foundry that takes in work from other fabless semiconductor companies, said Roger L. Kay, president of Endpoint Technologies Associates

"Good on AMD for putting together the right partnership with various financing groups in Abu Dhabi," he said.

While Intel and AMD have clung to their manufacturing facilities, "fabless" semiconductor companies such as ARM, a designer of microprocessors for mobile and embedded devices, and contract manufacturing companies such as Taiwan Semiconductor Manufacturing Co. (TSMC) are an established feature of the chip manufacturing industry.

AMD will announce its third-quarter earnings on Oct. 16, after the stock market closes. It has made a loss in the last seven quarters.

Spooner sees an end to that losing streak: "A more competitive AMD product line will bring with it higher revenue and profitability for the chipmaker, reversing its recent string of unprofitable quarters."