Updated from 1:27 a.m. EDT

Advanced Micro Devices ( AMD) confirmed Tuesday a plan to cut costs by spinning off its manufacturing operations to a new joint venture with an Abu Dhabi investment firm.

The new venture, to be called "Foundry Co. " on a temporary basis, will make chips for AMD and other companies.

AMD will contribute to the venture its manufacturing facilities, including two fabrication facilities in Dresden, Germany, as well as related assets and intellectual property rights, AMD said in a statement Tuesday.

Advanced Technology Investment Co. of Abu Dhabi will invest $2.1 billion to purchase its stake in Foundry, of which it will invest $1.4 billion directly in the new entity and the remainder will be paid to AMD to purchase additional shares in Foundry.

Foundry also will assume about $1.2 billion of AMD's existing debt. Advanced Technology Investment has committed additional equity funding to Foundry of a minimum of $3.6 billion and up to $6 billion over the next five years to fund the expansion of Foundry's chip-making capacity.

AMD will own 44.4% of the venture and Advanced Technology Investment will own 55.6%.

Including the value of the AMD operations being contributed, the venture is expected to control assets worth about $5 billion, the Wall Street Journal reports.

In conjunction with the venture, Abu Dhabi government's investment division, Mubadala Development, one of the investors in the venture, will increase its investment in AMD to 19.3% from 8%, AMD said.

This article was written by a staff member of TheStreet.com.

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