AMD have just announced that they are now on a joint venture with electronics giant, Fujitsu. The two companies will be pairing together to provide factories in Penang (Malaysia) and Suzhou (China). Fujitsu will be getting a whopping 85 percent of the joint venture, which is suspected to heavily reduce AMD’s capital expenditure. Approximately 1700 workers at the two factories will become employees of the new venture the companies stated. For AMD, this is all for $371 Million in cash and retain a 15% stake in the new entity.

AMD announced on their investor relations page:

AMD (NASDAQ: AMD) and Nantong Fujitsu Microelectronics Co., Ltd (NFME) (SZSE: TFWD) today announced the signing of a definitive agreement to create a joint venture combining AMD’s high-volume assembly, test, mark, and pack (ATMP) facilities and experienced workforce in Penang, Malaysia and Suzhou, China with NFME’s established outsourced semiconductor assembly and test (OSAT) expertise. Upon close, the new business will leverage the capabilities of 5 facilities and approximately 5,800 employees to offer differentiated ATMP capabilities and scale to service a broad range of customers. The transaction is expected to close in the first half of 2016, pending successful completion of regulatory approvals.

The transaction is expected to be closed in the first half of 2016, pending completion of regulatory approvals. The joint venture positioned to take advantage of the increasing demand for semiconductor assembly and test services (SATS).

AMD also state:

According to Gartner Research, the SATS market revenue is expected to be $27.4 billion for 2015, with growth of 1.1 percent. The 2014 through 2019 CAGR for the market is forecast to be 4.6 percent, leading to approximately $34 billion in total estimated market revenue by 2019

AMD will contribute to the joint venture: ATMP facilities in Penang, Malaysia and Suzhou, China Approximately 1,700 employees — including the site leadership teams which will continue to provide management and oversight

NFME will purchase an 85 percent share of AMD’s Penang and Suzhou operations, and serve as controlling partner for the new combined business.

As consideration for the transaction, at close AMD expects to receive approximately $371 million from NFME, record cash of $320 million, net of expenses, and retain 15 percent ownership of its Penang and Suzhou operations.

Post close, AMD expects the transaction to be cost neutral with significantly reduced AMD capital expenditures.

There are no planned workforce reductions at AMD’s Penang or Suzhou facilities in conjunction with the creation of the joint venture.

I think AMD are back on the radar now, they seemed to be struggling in the market recently and share value was dropping rapidly. This move by Fujitsu has helped AMD get back into the market and will hopefully providing us with some awesome new chips and tech. The company reported that they were down 5% on their gross margin this year, due to an inventory write down of $65 million. Their woes were concentrated on its PC business, with suffered a $181 million loss on $424 million revenue.

AMD have been serving us for 45 years now, they’ve driven some serious innovation in their processors, graphics and visualization technologies, big building blocks for gaming, immersive platforms and data centers.