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Bush, along with some of his cabinet’s, longstanding relationship with oil producers along the gulf was close enough to often draw criticism. Obama’s administration, while promising more open relationships in general, lacks the same immediate affinity for the UAE.
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Elected Politicians in Charge of an Apolitical Process
While the CFIUS review is supposed to look only at national security while keeping US markets open and fair, it is hard to imagine, based on the public reaction to CFIUS decisions like the DP World deal, that a committee made up of politically ambitious people, reporting to an elected official, is able to abstract the problem entirely.
A President that faced criticism during his candidacy for being willing to hold talks with the Iranian president may not be that eager to approve a deal that is being argued as soft on the UAE’s trade policy with Iran. The same President ran on a change platform and may be hesitant to do something that appears similar to what his predecessor may have done.
On the other hand, AMD needs the money, and the US manufacturing sector could certainly use the almost 1500 jobs that would be created by a new semiconductor fab in Saratoga County if the deal proceeds. Both are factors CFIUS may consider, even if they aren’t really supposed to as part of their national security mandate. Then again, as the military uses a lot of AMD product, AMD going under could be a significant security supply concern.
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Ask Again Later
It is impossible to say with any certainty which way the CFIUS review will come down. Having spent a few articles looking at CFIUS and the 2007 FINSA changes (which were supposed to have increased transparency), along with some of their recent, high-profile, cases that share some facets with the AMD-Abu Dhabi proposal, it seems like their decisions are more inscrutable than ever.
Furthermore, as detailed in previous articles, CFIUS review is highly confidential, and this is a complicated case balancing questions of military supply; relations with military and financial allies and their relations with less friendly parties in the Middle East; other existing legislation and policy; and keeping the US economy open and attractive to foreign investors. That last concern is greater than ever in the current US financial climate.
The greatest complication is we don’t even know which White House will be handling the review. If the decision doesn’t occur before Obama’s inauguration, it will be a very early and interesting test of his cabinet picks' ability to simultaneously handle the two big issues: security and economy.
It is also an important one, not just to Americans but everyone that uses a computer worldwide. Few will begrudge the US’ right to protect sensitive military technology, and CFIUS can do this through its power to impose conditions on their approval. Blocking the deal outright on the grounds that off the shelf AMD chips will make their way through the UAE to Iran, while sending billions of dollars of sophisticated military equipment to the UAE annually, is likely to draw criticism in and outside the US, however. Particularly if it leaves AMD in dire straights, and we lose the competition that has driven the availability of ever cheaper computing power.
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The CFIUS approval is only one of several challenges to AMD’s plans to spin off its fabrication assets into the Foundry Company. AMD has already obtained approval from the Empire State Development Corporation for a $1.2 billion package of subsidies and incentives towards the building of Fab 4X in Saratoga County. But, there is conjecture that Intel could threaten AMD’s license to produce x86 chips through the new company.
Do Recent Changes to CFIUS and a New White House Complicate Needed Approvals for AMD’s Asset Lite Plans?
- AMD Seeks Approval For Foundry Spin-Off from an Ever Changing CFIUS
- AMD’s CFIUS Approval Hinges on Many Factors
- CFIUS Must Consider AMD’s Position as Military Supplier when Vetting Abu Dhabi Deal
- AMD’s CFIUS Approval Based on US-UAE Relations
- Which White House is Handling AMD and Abu Dhabi’s CFIUS Review?