Moody's has downgraded AMD's corporate rating.

AMD, which now has a negative rating, recently announced that its fourth quarter results would be significantly weaker than originally anticipated. In addition, AMD's stake in the New York State Foundry has dropped to 34.2 per cent from 44.4 per cent, while ATIC's ownership increased from 55.6 per cent to 65.8 per cent. Mubadala is expected to purchase an additional 58 million shares of AMD's common stock, which is currently valued at $182 million less than when the agreement was finalised on 7 October.

Moody's also cited a continued weak demand for AMD's end markets as a justification for its revision.

"As a result, Moody's believes it is likely that AMD will continue to lose money and remain free cash flow negative during 2009," said the firm.

However, the investment giant noted that "the negative outlook rating could be stabilised over time if AMD demonstrates a sustained return to profitability and positive cash flow".

Meanwhile, AMD has denied reports that it is planning to establish a $2 billion 12-inch chip foundry in Jinan, China. A company executive explained that the chip manufacturer was attempting to turn a profit and had no intention of forming yet another foundry. The latest foundry rumour has been attributed to a recent memorandum of understanding (MoU) between AMD and the Shandong Provincial Government that outlined "strategic cooperation" in the integrated circuit industry.

As IT Examiner previously reported, AMD's NY State Foundry scheme was criticised by Morris Chang, who formed the Taiwan Semiconductor Manufacturing Company (TSMC) in 1987. According to Chang, the plant was located too far away from both suppliers and customers. Nevertheless, AMD CEO Dirk Meyer has insisted that creating the Foundry Company would relieve the firm of the capital burden of constantly building new fabs.

Indeed, an optimistic Meyer recently told analysts gathered at Sunnyvale headquarters that he hoped to transform the company into a cash-generating machine, despite plans to cut at least 500 jobs and outsource manufacturing to increase cash flow.

"We put out in front of you a very conservative view. But even with that conservative view, we can generate cash," said Meyer. X

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