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Abudhabi buys into US chips { November 19 2007 }

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Abu Dhabi buys into US chip firm

Richard Wray
The Guardian
Monday November 19 2007

An investment company owned by the Abu Dhabi government has picked up an 8.1% stake in the second-largest maker of computer microprocessors in a move likely to raise concerns among American politicians over the increasing influence of Arab nations on the US economy.

Advanced Micro Devices (AMD), based in Sunnyvale, California, and listed in New York, sold the stake to help finance the building of a new plant and recent acquisitions as it competes with the market leader, Intel. Mubadala Development Company, set up in 2002, paid $622m (303m) for its 49m new shares.

It is the latest so-called sovereign wealth fund to use the proceeds of the soaring oil price to buy into western companies. Merrill Lynch estimates that the amount of money these vehicles have to invest in shares, government bonds, property and other assets outside their home markets will rise from just under $2tn (1tn) this year to almost $8tn in 2011.

Mubadala this year bought a 7.5% stake in Carlyle Group, arguably the most influential private equity firm in the US, and also has a stake in Ferrari. Investment funds backed by the government of neighbouring Qatar have bought into the London Stock Exchange and were behind the recent abortive bid for J Sainsbury. Dubai International Capital, meanwhile, has taken stakes in the US hedge fund manager Och-Ziff Capital Management Group, the Indian bank ICICI and the defence firm EADS.

The increasing influence of funds from Arab nations has raised worries among politicians in Washington, especially when it involves investment in potentially crucial intellectual property in sensitive areas such as defence and technology.

Dubai's announcement of a planned investment in the Nasdaq American technology market, for instance, drew a response from George Bush that the deal's "national security implications" would be fully explored before the deal was approved. Henry Paulson, US treasury secretary, repeated his call for a code of "best practice" for sovereign wealth funds.

A year ago Dubai Ports World's takeover of the UK-based P&O ran into serious problems with the US authorities because of its role in running a number of US ports. That deal was eventually approved by the US committee on foreign investments but was criticised by politicians across the political divide. Though it was eventually cleared, P&O's US ports were quickly sold on to a domestic operator.

News of the investment is a vote of confidence for AMD, which has been posting multibillion-dollar losses.

Abu dhabi may buy new york icon building { June 11 2008 }
Abudhabi buys into US chips { November 19 2007 }
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Dubailand aims to be middle east orlando { June 19 2007 }
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