AMD will be split into two firms, one designing and the other making computer chips [AP]

A statement from AMD on Tuesday said that the move was made to remain competitive with Intel Corp, the market leader.

AMD will break up into one firm designing computer chips and another which builds them.

Two Abu Dhabi investment firms have put finance into the latter, which is provisionally called The Foundry Company.

One of them, Advanced Technology Investment Co (ATIC), will be the major shareholder in the new firm with a 55.6 per cent share.

ATIC was formed by the government of Abu Dhabi to invest in advanced technology.

It will invest $2.1bn in the company and assume $1.2bn of AMD's existing debt.

ATIC will also make up to $6bn will be available over the next five years for the venture.

The finance includes provisions for expanding capacity at factories in Dresden, Germany, and building a new plant with 1,400 jobs in Saratoga County, New York.

The deal is thought to facilitate AMD, from California, in concentrating on the design and development of computer chips.

Second deal

Mubadala Development Co, the other investment firm from Abu Dhabi, approximately doubled its investment in AMD to 19.3 per cent it was announced on Tuesday.

Mubadala's shares and warrants in AMD are now worth $314million.

Dirk Meyer, AMD's president and chief executive officer, said the deals marked a "landmark day for AMD, creating a financially stronger company with a tightened focus.

"With The Foundry Company, AMD has developed an innovative way to focus our efforts on design while maintaining access to the leading-edge manufacturing technologies that our business needs," he said.

Waleed al-Mokarrab, ATIC's chairman, said: "Today's announcement significantly reshapes the global semiconductor industry."

The deal is expected to be closed in early 2009.

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