Advanced Micro Devices is expected to announce later today its split into two separate companies with different agendas, in an effort to keep up with its competition. One of the companies will be focused on designing microprocessors and the other will deal with the manufacturing process. AMD is one of the biggest graphics, computer and server processor makers.

The company recently announced that two Abu Dhabi investment firms will inject more than $6 billion in the two companies and some of that amount will be used for building a new chip factory in Malta near Albany, New York and also for upgrading the plants located in Dresden, Germany. The chip plant in Malta will demand $3.2 billion to make and will be owned by the manufacturing company. Considering the fact that it will employ close to 1,400 workers, the State of New York is expected to give more than $1 billion in incentives.

“We generally believe this deal is a game changer for the industry,” said Khaldoon Al Mubarak, chief executive of Mubadala. “It’s bold, and I think it’s smart.” The Mubadala Development Company, is an Abu Dhabi company that bought last November 8 percent of AMD and announced a new transaction of $314 million for acquiring 58 million shares, which will boost its hold on the company to 19.3 percent.

Its constant efforts to develop smaller, faster, more energy-efficient chips and also the new chip plants led to significant financial issues, as around June AMD reported a debt of $5.3 billion.

A.M.D.’s chief executive, Dirk Meyer, explained that “This is the biggest announcement in our history. […] 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.”

The entire process must be validated by all the share holders, regulators and officials from both New York and Germany and if everything goes according to plan, everything should be in place in early 2009.

The company’s transformation has been supported for more than a year by AMD’s chairman, Hector Ruiz, as it is considered the best way of reducing the costs of running factories and also developing new production processes, which translate into significant earnings through an improved set of better and cheaper chips.

Intel, the world’s biggest chip maker, is responsible for AMD’s troubles over the past few years, as it seems that the company has a tight lock on the market and not only that, but it also keeps reinventing itself, providing new and improved products on a regular basis to ensure its distant lead. AMD’s new strategy is expected to change all that, providing a real competition in the years to come. Still, the process will demand a lot of work and before everything kicks off, as mentioned above, the plan needs to receive an approval.

We will update the story as soon the official announcement will be made.