Following the AMD revenue loss news yesterday, the company will begin outsourcing its microprocessor assembly, testing, marking, and packaging operations to Nantong Fujitsu Microelectronics Co., Ltd (NFME), a Chinese company with expertise in semiconductor assembly and testing (pictured below).
The deal, which is expected to go live in the first half of 2016, is valued at $436 million. AMD will provide its facilities in the region and their 1,700 employees to NFME (including management), who will in turn provide AMD with $371 million. NFME will achieve 85% ownership, thereby serving as controlling shareholder of this joint-venture (not AMD itself). The joint-venture will house a total 5,800 employees across five facilities. No workforce reductions are planned.
AMD says it made the deal to cut expenses while providing itself with an infusion of cash. There's also something to be said for the enhancement of its supply chain operations.