"At heart, we're a reverse engineering design company" - AMD

"Advanced Micro Devices Inc closed a deal to spin off its manufacturing operations on Monday, and said it expects the new company to assume responsibility for paying off about $1.1 billion of debt.
The plants which make AMD's chips are now part of a $5 billion joint venture with Advanced Technology Investment Co, of Abu Dhabi, temporarily called The Foundry Co." - Reuters

In a very creative way, AMD has ridden itself of its crippling debt and the massive burden of capital investment going forward. While AMD may sound as if this strategic move brings them closer to their core expertise, it is without a doubt that this back-to-the-corner decision was the only way for AMD to remain viable. This new lease allows AMD, maybe for a few more product lifecycles to continue and remain as the only challenger to Intel.

At the bleeding edge of semiconductor technology, it has yet to be seen whether a fabless company can challenge one with a foundry. In the not so bleeding edge such as memory products companies with their own foundry like Samsung are dominating over the rest of the industry but competition remains vibrant. But in the x86 space where process leadership creates cost and performance advantages, history isn't kind to fabless companies. Starting this week, AMD is effectively what Transmeta was back in 2000. The difference is Transmeta had a lot of hype going for them and probably with a more compelling product offering in the mobile space.