How one dinner with Ferrari saved AMD from financial collapse - gillespiewitimpet

AMD and the Mercedes-AMG Petronas F1 team have announced a multi-twelvemonth partnership, effectively putting an last to old age of Ferrari Recipe One friendship. So it sounds like a good metre to look back on the company's decades-old relationship with the Prancing Horse, and how it once helped AMD keep the money-hungry wolves from the door.

It's non been an easy ride for the Silicon Valley startup during its 50-year history. As former AMD CEO Hector Ruiz (2002 – 2008) would subsequent remark, AMD was ever-so-more or less financial collapse on many occasions. And hardly a as catastrophic as the one AMD was facing leading upwards to divesting its manufacturing arm – later to become GlobalFoundries.

Suffering through Intel's Core revival, AMD managed to nett itself a deal to sell its manufacturing arm to a state-closely-held Abu Dhabi investment funds society through a rather unexpected channel: the son of a renowned automobile manufacturer, Piero Ferrari. Operating theater leastways that's how Hector Ruiz tells it in his playscript: AMD's Fight to Free an Industry from the Ruthless Grip of Intel, Greenleaf Book Group Press (2013).

I'll hold, the rule book is a bit grandiose at times, but how oftentimes brawl you get a best-hand account of what went Down inside these secretive Silicon Valley companies? At least it's a useful source about how AMD's execs saw their have actions and its position in the market.

Leaving into 2007 AMD was under commercial enterprise strain. The company had recently purchased graphics expert ATI for $5.4bn, and Intel was finally managing to lucifer its Athlon and Opteron CPUs in the CPU market with its Kernel branded products. As Ruiz tells it, "the survival of AMD was at stake."

But AMD's execs had a plan to deal with the pressure. Rather than keep pumping money into its massively expensive fab facilities – founder and CEO Jerry Sanders had demanded AMD invest to a great extent into fabs during his tenure – the company would search for ways to shed its manufacturing arm and go fabless. As ATI and Nvidia had recently, and successfully, demonstrated.

An chance and then arose with Abu Dhabi investment firm, Mubadala Development. AMD had prototypical sought-after a mere investment funds from the company, but talks had slowly moved toward something more.

"Why not betray them all our factories?" Ruiz claims to have told Giuliano Meroni, head of AMD EMEA. "Remember about it: Wherefore are we carrying this debt load? Wherefore are we still as vertically integrated as we are, when it's non service of process us well? Aver we exercise a collective venture on manufacturing. AMD breaks free from a business model we can't really afford, and United Arab Emirates's capital gets valuable technology assets that information technology doesn't give birth – that no one in the region has. IT'll work."

AMD's board of directors was still apprehensive, but Ruiz had definite the plan was the best course of action. And, the way atomic number 2 describes information technology, AMD had no some other choice.

Meroni would struggle to get Abu Dhabi's tending, however. The Crown Prince was too engaged to entertain the business proposal and AMD wasn't getting anywhere. It wasn't until extraordinary even where Meroni was dining at Ristorante Cavallino – the Ferrari heir's own restaurant – that opportunity would strike. Ferrari knew the Peak Prince personally, and so helium set up a merging between two of Mubadala's VPs and AMD.

Kudos @ScuderiaFerrari, #kimi7 and #seb5. We are super proud of the way you fought today for the win! Fantastic good afternoon with our @AMD friends and partners at the #AustinGP 😎 pic.chitter.com/UYh69nXa5z

— Lisa Su (@LisaSu) Oct 21, 2018

Turns out, Abu Dhabi had recently bought a 5% stake in Ferrari. AMD sponsored Ferrari's F1 team, as it does today, and the unlikely connection allowed AMD a pass right into the investment firm's inner circle.

"When Giuliano relayed his write up to me," Ruiz says. "he kept repeating, 'È un miracolo.' I didn't know about a 'miracle,' but the link up through Piero Ferrari did sound like serendipity, a apodictic blessing, and IT reinforced something I had long suspected: Relationships really are all-important in business American Samoa in life."

Information technology would take roughly time to finalise, but AMD's execs managed to incommunicative the deal in Palo Alto in 2008. AMD was under meaningful pressure to finalise the deal, it had, subsequently all, reported its seventh consecutive quarterly expiration – some $1.2bn – that July. Ruiz claims to have sold Abu Dhabi on the idea that there were other players in the game. That had cranked up the press plenty that eventually some companies in agreement to the terms.

The deal, announced on October 7, 2008, would create "The Foundry Companion," later called GlobalFoundries. It was worth nearly $5bn from the get-go, backed A it was by Mubadala Development and the newly-created ATIC, or Later Technology Investment Company. The deal would see AMD itself unlade $1.2bn in debt and walk away with concluded $1bn in cash. Its annual hard cash flow went from losing $1bn to generating $600 billion nearly overnight, saving it from financial ruin.