AMD Surges on Manufacturing Spinoff

Advanced Micro Devices' ( AMD) shares got a boost Wednesday, surging more than 11% as investors responded to the firm's manufacturing revamp.

The chipmaker has finally completed the spinoff of its manufacturing operation, relaunching its offshoot as GlobalFoundries early Wednesday.

AMD, which has struggled mightily along with the rest of the tech sector, announced the spinoff plan in October, and now it joins other chip companies like Texas Instruments ( TXN ) and ST Microelectronics ( STM) in outsourcing chip production.

By spinning off its manufacturing business, AMD is looking to better control capital expenses, a move that's clearly resonating with investors. The company's shares rose 23 cents, or 11.1%, to close at $2.30, outpacing the broader rally in tech stocks that saw the Nasdaq gain 2.5%.

Jointly owned by AMD and the Abu Dhabi-based Advanced Technology Investment Company, GlobalFoundries will provide manufacturing to its parent company as well as to third-party customers.

The spinoff's CEO is Doug Grose, formerly AMD's senior vice president of manufacturing operations. GlobalFoundries' chairman is Hector Ruiz, who previously held the same role at AMD.

Like AMD, GlobalFoundries is based in Silicon Valley, although much of its chip manufacturing will be done in Dresden, Germany. The firm will also break ground on a facility in Saratoga County, New York, sometime this year.

AMD is not the only chip specialist overhauling its strategy to fight the tough economy. Intel ( INTC), for example, teamed up with Taiwanese chip manufacturer TSMC on Monday, announcing plans to collaborate around Intel's Atom processor.

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