Summary
Advanced Micro Devices Inc. (AMD) announced on October 15, 2015, a significant strategic move with the formation of two joint ventures (JVs) with Nantong Fujitsu Microelectronics Co., Ltd. (JV Party). This transaction involves the sale of a majority equity stake (85%) in AMD's Chinese and Malaysian subsidiaries, which focus on assembly, testing, marking, packing, and packaging services, for approximately $436 million. AMD will retain a 15% interest in these JVs and anticipates receiving approximately $320 million in cash, net of taxes and expenses. This joint venture structure allows AMD to monetize a portion of its back-end operations while securing ongoing services through a Manufacturing Services Agreement. The company plans to account for its remaining investment using the equity method. The transaction is subject to customary closing conditions, including government approvals, and is expected to result in a strategic partnership for AMD's manufacturing needs in this segment.
Key Highlights
- 1AMD forms two joint ventures with Nantong Fujitsu Microelectronics Co., Ltd. (JV Party) to handle assembly, testing, marking, packing, and packaging services.
- 2AMD sells an 85% equity stake in its Chinese and Malaysian subsidiaries (Target Companies) to JV Party for approximately $436 million.
- 3AMD expects to receive approximately $320 million in cash, net of taxes and customary expenses.
- 4AMD will retain a 15% equity interest in each of the formed joint ventures.
- 5The joint ventures will operate under separate Shareholders' Agreements and Joint Venture Contracts, with JV Party appointing the majority of directors (3 out of 5).
- 6Related agreements include IP licensing, manufacturing services, transition services, and trademark licensing to ensure operational continuity and partnership.
- 7The transaction is subject to customary closing conditions, including receipt of government approvals.