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The embattled chipmaker is making the move in a bid to stem heavy losses. The company posted losses of almost $1.2 billion on revenues of £1.35 billion back in July.

Those figures were the last straw for CEO Hector Ruiz. He made way for former chief operating officer Dirk Meyer, who made the announcement on the company's future in

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a conference call to analysts and journalists.

Meyer announced that the new venture will receive $5.7 billion worth of funding from Dubai-based firm Advanced Technology. The money will be spent on building a new manufacturing facility in New York, as well as upgrading an existing plant in Dresden, Germany.

The new manufacturing firm will initially be known as The Foundry Company, with AMD retaining a 44% stake.

The new investment will help AMD keep pace with rival Intel, which has developed a significant technology lead over its debt-saddled rival.

"This is the biggest announcement in our history," says AMD's chief executive, Dirk Meyer. "This will make us a financially stronger company, both in the near term and in the long term, as a result of being out from the capital expense burden we have had to bear."

Meyer also announced that the Mubadala Development Company, an Abu Dhabi company that bought 8.1% of AMD in November, had increased its stake to 19.3% - paying $314 million for the privilege.