$436 million agreement combines AMD's high-volume ATMP facilities with Nantong Fujitsu Microelectronics' OSAT expertise to service broad range of customers
- Latest step in AMD's strategic transformation further sharpens focus and operations on designing high-performance products
- AMD to contribute Penang and Suzhou assembly and test manufacturing facilities, including approximately 1,700 employees and management team
- Nantong Fujitsu Microelectronics to take 85% ownership and serve as controlling shareholder, paying AMD approximately $371 million in cash
"We continue our strategic transformation by creating a joint venture combining AMD's high-volume assembly, test and packaging facilities and our experienced workforce with NFME's expertise in outsourced semiconductor assembly and testing," said AMD Senior Vice President, Chief Financial Officer and Treasurer Devinder Kumar. "NFME is an ideal partner with the vision and business plan to successfully lead the joint venture upon the close of the transaction. We continue to sharpen the focus of our ongoing investments on designing differentiated, high performance technologies and products that can drive long term profitable growth. The formation of this JV further strengthens our balance sheet with significant asset monetization."
Shi Lei, the general manager of NFME, said, "AMD has world-class advanced assembly and testing facilities and a rich history of high-volume production. AMD's technology and expertise is very complementary to our current capabilities. The newly-formed JV will improve NFME's R&D capability and enhance our corporate reputation worldwide. The JV will also strengthen our opportunities to further move into international markets and secure additional customers as a part of our plans to become one of the world's leading assembly and testing companies."
The joint venture marks another step in AMD's strategic plan to sharpen its focus on building great products while enhancing the company's supply chain operations in the long run by providing additional scale and strengthening its balance sheet through a cash infusion and reduced capital expenditures aligned with a fabless business model.
The joint venture is well positioned to take advantage of the increasing demand for semiconductor assembly and test services (SATS). 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(1).
Key highlights of the definitive agreement include:
- 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.
J.P. Morgan Securities LLC served as exclusive financial advisor to AMD, and provided a fairness opinion to the board of directors of AMD.
- Find more information on the joint venture here
- Learn more about AMD's Long-term Strategy
- Visit the AMD Investor Relations site
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About Nantong Fujitsu Microelectronics
Established in 1994 and headquartered in Nantong City of China's Jiangsu province, Nantong Fujitsu Microelectronics Co., Ltd. (NFME) stands at the forefront of industry science and technology development as one of the 3 largest IC assembly and testing companies in China. NFME services more than half of the top 10 semiconductor manufacturers in the world, such as ST Microelectronics and Texas Instruments. Current company offerings include advanced assembly technologies, such as WLCSP, FC, BGA, BUMPING, MEMS, traditional assembly technologies, such as QFN, QFP, TSSOP and automotive electronics assembly technologies. Besides, NFME has the capability of testing technologies, including Wafer Probe Final Test, and System Level Test. NFME is the first company, which realizes the mass production of 12 inch 28 nm high-end mobile phone processor chip in China. The company is listed on the Shenzhen Stock Exchange under the Ticker name "TFWD" or "002156.SZ". Learn more at: http://www.fujitsu-nt.com/.
This press release contains forward-looking statements concerning Advanced Micro Devices, Inc. ("AMD" or the "Company") including, but not limited to the proposed formation of the joint venture companies (the "JVs"), the ability of the JVs to function as an independent business, the ability of the JVs to leverage the capabilities of facilities and employees located in Penang, Malaysia and Suzhou, China; the ability of the JVs to scale service to a broad range of customers, reach international market and become a leading ATMP, the JVs' expected future performance (including expected results of operations and financial guidance), synergies from the proposed transaction; the JVs' future financial condition, operating results, strategy and plans, financial projections and estimates and their underlying assumptions; the anticipated benefits and growth opportunities of the JVs including the JV's ability to attract new customers, the impact of and the ability of the JVs to take advantage of the semiconductor assembly and test services market, the ability of the parties to obtain all required regulatory and other approvals and close the transaction, the timing of the closing of the transaction, the purchase price of the transaction and the cash received by AMD, AMD's anticipated benefits from the transaction including the expectation that the transaction will strengthen AMD's balance sheet and the transaction will be cost neutral for AMD with significantly reduced capital expenditures, and that there will be no workforce reductions, all of which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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1. Gartner Research Forecast: Semiconductor Assembly and Test Services, Worldwide, 3Q15 Update 06 October 2015 G00272330.
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