Advanced Micro Devices, Inc. (NASDAQ:AMD) and Nantong Fujitsu Microelectronics Co., Ltd. (NFME) announced that they have closed the transaction to create a joint venture offering differentiated assembly, test, mark, and pack (ATMP) capabilities to both AMD and a broader range of customers.
“Combining AMD’s world-class teams and facilities in Penang and Suzhou with NFME’s expertise in the growing assembly and test market will create a new outsource assembly and test leader with the scale and capabilities to help us deliver our upcoming high-performance technologies and products that can re-shape the industry,” said AMD President and CEO Dr. Lisa Su. “The creation of this joint venture marks another step in building a more focused AMD as we complete our transition to a fabless business model, enhance our supply chain operations, and further strengthen our financial position.”
“AMD is a world class semiconductor provider with advanced flip chip packaging and test technologies. These capabilities are complementary with NFME’s advanced packaging and test technologies, such as its flip chip and bump technology for the computing, communication and consumer market. The establishment of this joint venture will elevate the competitiveness of NFME’s flip chip packaging and test technologies to a world-class level. With this joint venture, NFME’s advanced packaging and test capabilities will account for 70 percent of its total revenue, leading the entire industry and ranking among the top packaging and test companies in the world,” said Chairman of Nantong Fujitsu Mr. Shi Mingda.
Key highlights of the deal include:
- NFME’s affiliates have purchased an 85 percent share of AMD’s Penang, Malaysia and Suzhou, China ATMP operations and act as controlling partner for the new joint venture business.
- AMD received from NFME approximately $371 million, excluding purchase price adjustments, with net cash proceeds of approximately $320 million after payment of taxes and other customary expenses. AMD retains a 15 percent ownership of the Penang and Suzhou operations.
- The transaction is expected to be cost neutral to AMD’s P&L while significantly reducing AMD’s capital expenditures. AMD will account for its 15 percent ownership stake in the joint venture and its results of operations under the equity method of accounting.
- Approximately 1,700 AMD employees transitioned to the joint venture. (Original Source)
Shares of AMD are up nearly 3% in pre-market trading to $3.73. AMD has a 1-year high of $3.99 and a 1-year low of $1.61. The stock’s 50-day moving average is $2.87 and its 200-day moving average is $2.38.
On the ratings front, AMD has been the subject of a number of recent research reports. In a report issued on April 27, Morgan Stanley analyst Joseph Moore reiterated a Sell rating on AMD, with a price target of $2.65, which represents a potential downside of 26.6% from where the stock is currently trading. Separately, on April 25, Wedbush’s Betsy Van Hees maintained a Hold rating on the stock and has a price target of $3.50.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Joseph Moore and Betsy Van Hees have a total average return of 6.7% and 14.1% respectively. Moore has a success rate of 55.4% and is ranked #587 out of 3837 analysts, while Hees has a success rate of 53.4% and is ranked #188.
The street is mostly Neutral on AMD stock. Out of 15 analysts who cover the stock, 8 suggest a Hold rating , 4 suggest a Buy and 3 recommend to Sell the stock. The 12-month average price target assigned to the stock is $3.38, which represents a potential downside of 6.4% from where the stock is currently trading.
Advanced Micro Devices, Inc. is a global semiconductor company that develops computer processors and related technologies for business and consumer markets. It design and integrate technology for intelligent devices, including personal computers, game consoles and cloud servers. The company operates through two business segments: Computing and Graphics Solutions, and Enterprise, Embedded and Semi-Custom. The Computing and Graphics segment includes desktop, notebook processors, chipsets, discrete GPUs and professional graphics. The Enterprise, Embedded and Semi-Custom segment includes server and embedded processors, dense servers, semi-custom SoC products, engineering services and royalties. Advanced Micro Devices was founded by W. J. Sanders III and David John Carey on May 1, 1969 and is headquartered in Sunnyvale, CA.