LONDON — Advanced Micro Devices Inc. has confirmed that it is splitting off its manufacturing operations in conjunction with the Advanced Technology Investment Company (ATIC) of Abu Dhabi and that it will build a wafer fab in upstate New York, that will create 1,400 jobs, and that the new "Foundry Company " would expand AMD's manufacturing operations in Dresden, Germany.

The news has been widely anticipated .

ATIC will invest $2.1 billion to purchase its stake in The Foundry Company, 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 The Foundry Company.

It will also invest a minimum of $3.6 billion and up to $6.0 billion over the next five years to fund the expansion of the foundry's chip-making capacity beyond the manufacturing facilities initially contributed by AMD.

ATIC is also taking on approximately $1.2 billion of AMD's existing debt.

ATIC will own 55.6 percent of the shares in the foundry operation, with AMD having a 44.4 percent stake.

At the same time, the Mubadala Development Company will double its current investment in AMD to 19.3 percent on a fully diluted basis, following the purchase of $314 million worth of AMD stock.

The new money will fund capacity expansion at the fabs in Dresden, Germany, including the proposed upgrade of one of its fabs to a state-of-the-art 300-mm facility, and begin construction on an advanced facility in Saratoga County, New York.

However, during a conference call with press and analysts, Hector Ruiz, who will relinquish his current role as AMD's executive chairman and chairman of the board to become chairman of The Foundry Company, said that negotiations are just now beginning in earnest with the State of New York about their potential investment in the proposed 300-mm fab. "They have so far been very enthusiastic and I am confident we will get an agreement and the incentives. But we have no signature as of today."

The new company will become part of the IBM foundry development alliance for both SOI and bulk silicon technology through the 22-nm generation.

Doug Grose will relinquish his current role as AMD's senior vice president of manufacturing operations to become chief executive officer of The Foundry Company.

Ruiz also said that there are likley to be "a small number of redundancies" at AMD once the deal is finalized, and that about 300 people working at AMD on process development in Austin, Texas and Silicon Valley will transfer to the new foundry. The bulk of the 3000 employees, initially, will be at Dresden.

The deal is expected to close early next year.