Abu Dhabi's High-Tech Bet on Chips

Less than 300 miles from where Bahrain's royal family faces a youth-led uprising, Ibrahim Ajami is trying to foment a different kind of revolution among the students of Abu Dhabi, the capital of the United Arab Emirates. Ajami, 36, runs Advanced Technology Investment, a division of Mubadala Development, the state fund that has invested billions of the emirate's oil and gas wealth in businesses that are supposed to perpetuate the city-state's prosperity—and peace—long after its crude has run out. Two years ago, Ajami, a former Occidental Petroleum (OXY) executive, helped broker a Mubadala-financed deal that merged the manufacturing side of Advanced Micro Devices (AMD), the U.S. chipmaker and archrival of Intel (INTC), with Chartered Semiconductor Manufacturing, Singapore's contract chip business. The result: GlobalFoundries, the third-largest contract chip manufacturer in the world, with plants in Asia, Europe, and the U.S., and an 86 percent stake held by Mubadala. In January, not long before the uprisings that engulfed Egypt and Libya, GlobalFoundries announced plans to double spending on new plants and equipment to more than $5.4 billion in 2011.

GlobalFoundries, which had $3.5 billion in revenue in 2010, packs a lot of punch. "They are coming to the market with state-of-the-art plants," says Jim McGregor, an industry analyst at research firm In-Stat. "Only a handful of people can do the high-end stuff, and there's increasing demand for that." Abu Dhabi hopes to have a chip plant up and running in the emirate itself by 2015: The plan is to build a tech complex that will also attract chip-design and software companies.