Tuesday, October 07, 2008

Hallelujah!

Rejoice New York! Regale, Capital Region! After more than a decade of governmental planning, prostituting, proselytizing and pontificating, officials from Advanced Micro Devices have announced they plan to move forward with their long-anticipated chip fabrication plant in proposed Luther Forest Technology Park in Malta. The new plant will bathe New York with untold riches, spreading highways of gold from the nanotechnology facility in Albany to the bumper-crop of engineers being cultivated at the Rensselaer Polytechnic Institute, turning the frightfully industry-free Hudson Valley into a burgeoning Mecca of the high-tech industry.

AMD, who some have and continue to regard as the Capital Region’s reigning Messiah, announced the news abruptly this morning, when they unveiled a deal to sell a good number of their assets to a shadow company owned solely by the government of the wealthiest city among the United Arab Emirates. This deal will create a partnership between the failing AMD and Abu Dhabi, which will then create a wholly new company that will build the $3.2 billion $4.5 billion chip fabrication plant in Malta.

All this and more will occur once New York State opens up its purse strings and doles out the $1.2 billion in aid formerly promised to AMD when they were the sole developer of the project. Ironically, this aid is just a hair short of the roughly $1.2 billion of debt AMD transferred to Advanced Technology Investment Company, the fledgling business created by Abu Dhabi and the Mubadala Development Company to “generate returns that deliver long‐term benefits to the Emirate.”

“This event will certainly go down as the most important transaction in the history of AMD and one of the most in the history of the semiconductor industry,” said Dirk Meyer, AMD’s President and CEO, during a telephone news conference Tuesday morning.

The new company –now called the Foundry –will have a split ownership between AMD and ATIC, which will own a majority of shares. AMD’s Hector Ruiz will assume duties as the new company’s chairman of the board of directors and Doug Grose, now the senior vice president of AMD, will become the CEO. In total, the Foundry Company will represent a $5.7 billion investment, which involves a 12-month agreement with the aforementioned Mubadala Development Company.

“It begins with great prospects,” said Waleed Al Mokarrab, the chairman, ATIC. “It has strong leadership, strong technology and a strong and sound financial basis.”

Let’s pause here and take a breath. Is your head spinning yet? Are you drunk on the idea of one of the world’s richest cities showering gold and platinum confetti over Saratoga County? Or are you just a bit sketched out by the fact that AMD’s rapidly deteriorating business has suddenly snagged interest of a bunch of investors who are looking to maximize on their return during a period of almost unprecedented global economic turmoil.

The timing of the deal comes as Gov. David Paterson is calling state legislators back to Albany to bridge the growing budget gap, which also happens to be around $1.2 billion. Still, Paterson says the AMD project is worth it: 1,500 high-tech positions for the long term and 600 construction jobs in the short term. And he’s basically right, even if it spells doom for many of the state-supported programs acting as a safety net for many underprivileged New Yorkers. The return of industry is the only thing that can save the state’s dire economic forecast. The lack of industry has created a void that can’t be patched by adding service-related jobs or creating market bubbles.

“Now we believe the money is going to be there,” he told the New York Post’s Fred Dicker Tuesday morning. “It could be one of the most significant technological developments this country has ever seen.”

But there’s still an air of doubt about the project, lingering like ill-timed flatulence in a closed elevator. Even during Tuesday’s conference call, the AMD press flack warned the listening reporters and analysts that the statements made by officials “shouldn’t be relied on as predictions of future events” and may face “uncertainties that could cause actual results to differ materially from our current expectations.” In other words, everyone is ready to sign on the dotted line except AMD and their new Arabian partner.

So what happens when the incentives run out? What happens when New York begins to tax the Arabs like the rest of the state? What happens if the state forks over the cash and suddenly “current expectations” don’t dictate such a project? Who buys all the damn chips that “the Foundry Company” produces if AMD suddenly goes belly up? And what will be the inevitable push-back from the almighty Intel in response to this bombshell announcement by their leading competitor?

Update: Sure enough, Intel has some serious questions about the Foundry Co. deal. Turns out the new deal might violate an agreement they had in place with AMD. Putting it in more succinct terms, stop the backslapping and get the lawyers on the horn. We have a multi-million dollar international lawsuit in the works here.

Well folks, these are questions for a later date. This day is reserved for the architects of this deal to reach down into the tray of the slot machine they’ve been sitting at for the past two years and grab the one shinny coin the damn thing has spit out over all that time. It’s also time for them to take that coin, plug it back into the one-armed bandit, and let this fucker ride. Who knows? This baby might still come up sevens.

14 Comments:

Anonymous Andrew J. Bernstein said...

HA -- Nice analysis. I, for one, am not holding my breath. Like you said, nothing is certain until it's all in writing.

At a press conference this afternoon, Commissioner of Finance Kenneth Ivins was already talking about the many benefits to the city, when AMD comes.

He's obviously correct that AMD will be a great thing for this area, but I hope he, and the rest of the government isn't counting their chickens before they hatch...

2:40 PM  
Blogger shotinthedark said...

Well bust my fucking britches...
(I think I heard Sara Palin say that in one of her speeches)

With all of the extensive negative economic news, the foolish consumption that many people have been undertaking, combined with all of the incompetent and shady people that have been running things, it is quite interesting and exciting that AMD appears to be moving forward on this.

A couple of thoughts if this does come to fruition.

Life the way we know it will be forever gone.
Many of us have been amazed and in a sense saddened how Saratoga has changed in the last 15 years. The building of this plant will put the final nails in the coffin of the way life once was.
For people that have the capabilities and enjoy making money this, this of course, will be a golden opportunity.
For many other people this project will further drive up prices causing more hardship.

3:22 PM  
Blogger Huck Finn said...

"But there’s still an air of doubt about the project, lingering like ill-timed flatulence in a closed elevator."

Great line Horatio, great line.

4:06 PM  
Anonymous Anonymous said...

We will have a new water authority and our local developer/realtor will be able to provide more housing opportunities (outside the City) requiring more County services (sorry Kommissioner, no local police demand except those laws that you are already mandated to enforce) as we wait, for the next incantation (ATIC-AMD) of this project based in large part on secured government funding.

3:35 AM  
Anonymous agphoto said...

AOL Keyword = fabrication.

4:26 AM  
Anonymous Anonymous said...

The majority of changes will be seen in Malta, and Ballston Spa. Not Saratoga. The marketing of houses, and apartments available are targeting that immediate area. The hint of AMD spawned the building of new housing developments, apartments,condos and shopping areas in Malta (not to mention a new exit from Round Lake). Saratoga will undoubtedly get some spill over, but not experience that direct hit.

7:44 AM  
Blogger shotinthedark said...

A person that I know who is in the realestate business told me recently that the Clifton Park housing area was on fire. The market is hot.

As far as factoring pricing into the AMD chip plant area, you could take a compass and draw a circle making Luther Forest the center with a 10 mile radius and predict sizable increases in most property values.
It's like they always say it's all about location, location, location.

4:24 PM  
Anonymous Anonymous said...

who the f*** gives a shit about rising property prices? we need to et out of thinking that way when it comes to economic development.

it's all about jobs, multipliers, spinoffs, etc...

NOT about housing prices.

6:58 AM  
Anonymous Kyle York said...

This AMD deal has more problems
than the Public Wreck facility.

#1. No matter what the PR flacks say, AMD is not an "EQUAL PARTNER" with the desert sheiks. THE FOUNDRY... the paper company that will MAKE chips... has AMD as a Junior partner with only 44.4% invested.

#2. In the years ahead, AMD will own LESS of the FOUNDRY. Eventually it will ALL be the property of ATIC, a company of the Government of Abu Dhabi U.A.E.

#3. IF and WHEN the FOUNDRY is built, no American will manage it...not for the first 12 years. THAT contract pours cash into the pocket of Mabdala, a managment firm from...ABU DHABI!

#4. The FEDS have to approve the partnership deal that leaves a foreign government as the majority owner of a hi-tech plant on US soil.

#5. INTEL may hammer AMD with a lawsuit, pursuant to their signed & sealed & secret court agreement. Although the details are sealed, it is known that Intel made AMD agree to RETAIN manufacturing capability. How much? The techhie bloggers are all abuzz. No reporter around here has gone beyond the AMD Press Release and happy and smiling faces.

#6. As noted by many, NYS must now decide to transfer the $1.2 billion... money that HAD been committed to AMD of Sunnyvale... Albany must now send all those greenbacks to the sheiks of Abu Dhabi, a country rich beyond belief.

#7. And FINALLY, the County engineers under the stumbling bumling lead of Dan Loewenstein my now finish the Water pipeline that is still held up by a law suit or five.

I'd laugh if this wasn't such a gross embarrassment to so many people with good intentions.

-Kyle York

12:27 PM  
Blogger shotinthedark said...

shotinthedark said...

Okay Kyle; official party-pooper.

The financial downward spiral we are now entering is no longer a slam bam thank you mam thing. What we are now going into is going to last between 10 and 20 years.
Many people are experiencing panic, worry, and concern.
A few of us are ecstatic.
Sanity, frugality, ingenuity will be returning.

6:11 PM  
Anonymous McTygue's Former Lover said...

AMD's fab 4X is the only good news this state has had since McTygue X3 and Kyle York got their ass's beat by the voters!

3:27 PM  
Anonymous Kyle York said...

Fab Lover 3:27-

SO...IFFFF I've just been flamed, dare I say, insulted, by your sentiment, I am left with the possibility of a profound quandary. To wit--

IF it should come to pass that "Fab 4x" FAILS to come and thereby it should herald in the "BAD NEWS"...

Does the semantical/financial reversal mean that you may be issuing me an anti-flame... or to speak your vernacular--

Would a 4X no-show mean I am a good person?

-Kyle

7:52 PM  
Anonymous agphoto said...

Kyle:
"Would a 4X no-show mean I am a good person?"

a strict constructionist would say no... however, you don't derive your goodness from silicone. keep on pitching; we don't always agree, but i like bold colors, not pastels.

it must be a 3-day weekend when i resort to channeling Dutch Reagan...

1:45 PM  
Anonymous Kyle York said...

HA- UPDATE TOO!!!

Yes Virginia, there IS a 1976 patent agreement between AMD and INTEL... and it's more of a Great White than a Red Herring. As the TWO big kids fighting in the sandbox, the only thing they've EVER agreed on is that THEY are the sacred keepers of the secret FabTech flame. INTEL is NOT about to let the $heik$ at ATIC become the third player at the table.

And lest anyone miss the Red Flag of Federal Regulation, there is a very real question of technology transfer--

"The deal will need approval from the Committee on Foreign Investment in the United States (CFIUS). The nine-member federal committee chaired by Treasury Secretary Henry Paulson reviews potential security issues surrounding foreign investment in the U.S., such as the deal announced Tuesday. ATIC, owned by the government of Abu Dhabi, plans to help fund FOUNDRY's new chip plant."

Many thanks to Rick Karlin of the Times-Union for exploring one of the minor issues too small and insignificant to make it into an AMD PR hand-out.

Horatio, thank you for keeping an open eye in the Land of the blinded-by-the-light.

-Kyle

6:33 PM  

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