The Advanced Technology Investment Company (ATIC) of Abu Dhabi is investing $2.1 billion in a new company formed by the California-based Advanced Micro Devices (AMD) and ATIC.

AMD will own 44.4 percent and ATIC 55.6 percent of The Foundry Company’s fully-converted common stock upon its formation.

ATIC is an investment company formed by the government of Abu Dhabi to invest in advanced technology opportunities that require patient capital and long-term time horizons to achieve economic returns while also increasing the economic diversification of Abu Dhabi.

The new global company, The Foundry Company, will be a leading-edge semiconductor manufacturer that will address growing demand for independent, leading-edge foundry production capabilities, ATIC and AMD said in a statement.

The Foundry Company will combine advanced process technology, industry-leading manufacturing facilities and aggressive plans to expand its global capacity footprint.

At the same time, capital-intensive Mubadala Development Company, also based in Abu Dhabi, will increase its current investment in AMD from 8.1 per cent to 19.3 percent of outstanding AMD shares on a fully diluted basis.

This will be accomplished through the purchase for $314 million of 58 million newly issued AMD shares and warrants for 30 million additional shares. Mubadala will also have the right to appoint a designee to AMD’s board of directors.

AMD will contribute to The Foundry Company its manufacturing facilities, including two fabrication facilities in Dresden, Germany, as well as related assets and intellectual property rights.

Of the $2.1 billion that ATIC has agreed to invest in The Foundry Company, it will invest $1.4 billion directly in the new entity and the remainder will be paid to AMD to purchase additional shares in The Foundry Company.

The Foundry Company will also assume approximately $1.2 billion of AMD’s existing debt. ATIC has committed additional equity funding to The Foundry Company of a minimum of $3.6 billion and up to $6 billion over the next five years to fund the expansion of The Foundry Company's chip-making capacity beyond the manufacturing facilities initially contributed by AMD.

While it enhances its capabilities specific to the transaction, ATIC will enter into a 12-month agreement with Mubadala to project manage ATIC’s interest in The Foundry Company.

As a result of the transactions, AMD will strengthen its financial position and focus on the design and development of innovative computing and graphics solutions.

AMD will improve its liquidity through The Foundry Company’s assumption of approximately $1.2 billion in debt, ATIC's $700 million payment to AMD for ownership interests in The Foundry Company and Mubadala’s $314 million paid to AMD for 58 million newly issued AMD shares and warrants for 30 million additional shares.

These funds will be used by The Foundry Company to:

1) Proceed with capacity expansion at its fabs in Dresden, Germany, including an upgrade of one of its fabs to a state-of-the-art facility, and

2) Begin construction on a new state-of-the-art facility in Saratoga County, New York, subject to the transfer of previously-approved New York State incentives.

The New York facility is expected to create more than 1,400 direct jobs, and, through its operation, to generate an additional 5,000 jobs in the region. Once operational, the New York facility will be the only independently-managed, leading-edge semiconductor manufacturing foundry in the United States.

Global demand for independent foundry manufacturing is growing because leading semiconductor companies are exiting manufacturing, as the cost and complexity increases and capital and research and development costs have become too high.

In addition, the world's requirements for devices that use more advanced semicon