building blocks for the Global economy - Knowledge@Wharton

The Middle east
silicon Wafers and semiconductors: a new black Gold
for abu dhabi?
The united Arab Emirates (uAE) has sought to become a globally competitive economy since its founding
in 1971. The country’s oil wealth and forward-thinking approach has allowed it to progress toward this goal
through capital-intensive economic initiatives, social programs and legal reforms.
The UAE’s leadership considers economic diversification
a necessity in order to protect the country’s economy
from oil-price fluctuations and to diversify sources of
income. Sheikh Zayed bin Sultan Al Nahyan, the founder
of the UAE and ruler of Abu Dhabi until his death in
2004, believed that “future generations will be living in
a world that is very different from that to which we are
accustomed. It is essential that we prepare ourselves and
our children for that new world.” This diversification
is needed as public sector employers have become
saturated, with some ministries spending as much as 92%
of their budgets on salaries. Given these factors, Sheikh
Zayed announced his intention to transition the country
from an energy-based economy to a knowledge-based
economy, dependent not on natural resources but on
competitive, highly educated human capital.
To achieve this goal, the Abu Dhabi government
established the Mubadala Development Company
in 2002. This 100% government-owned investment
vehicle is intended to act as a catalyst for economic
diversification. Since its founding, Mubadala has invested
in multiple industries, including aerospace, healthcare,
information and communications technology, oil
and gas, real estate and infrastructure and renewable
energy. In 2008, the company also helped to launch the
Advanced Technology Investment Company (ATIC) as a
means of entering the advanced technology sector.
48 Knowledge@Wharton • The Lauder Global Business Insight Report 2013
ATIC has focused its investment on semiconductors —
silicon wafers that act as the brains of every electronic
device. “The semiconductor industry is exactly the
industry [Abu Dhabi’s] leadership was looking for
— highly knowledge intensive, globally competitive,
highly productive and integrated into the global
economy,” ATIC’s CEO Ibrahim Ajami said in an
interview. In 2008, ATIC and Mubadala agreed to invest
jointly in Advanced Micro Devices (AMD), a leading
semiconductor company, as part of a joint venture
designed to create a new semiconductor manufacturer
out of AMD’s former manufacturing arm in Dresden,
Germany. The new company became known as
GlobalFoundries. A year later, ATIC acquired Singaporebased
semiconductor manufacturer Chartered
Semiconductor and integrated its operations into
GlobalFoundries to create the world’s first globalized
semiconductor fabricator. After steadily increasing its
stake in the company, ATIC bought out AMD and took a
100% share in GlobalFoundries in March 2012.
In 2012, ATIC and GlobalFoundries opened a new
foundry, Fab 8, in Malta, New York. The US$4.6
billion fabrication plant is the world’s most advanced
semiconductor production facility. It currently employs
more than 1,300 workers and plans to expand to at
least 1,600 by year’s end. To develop a pool of potential
employees for these positions, GlobalFoundries created
training programs at more than 17 local community