SUNNYVALE (AP)

With oil prices surg­ing and U.S. stock prices slump­ing, chip maker Advanced Micro Devices Inc.‘s sale of an 8.1 per­cent stake to the Abu Dhabi government’s invest­ment arm rep­re­sents the lat­est plunge by a wealthy Mid­dle East­ern nation into a trou­bled U.S. corporation.

It also raises fresh ques­tions about the appro­pri­ate­ness of Mid­dle East­ern firms own­ing large chunks of U.S. busi­nesses that spe­cial­ize in advanced technologies.

Sunnyvale-based AMD, the world’s No. 2 micro­proces­sor maker, needs the $622 mil­lion invest­ment from the Mubadala Devel­op­ment Com­pany to help lift the com­pany out of a deep finan­cial slump.

AMD has lost more than $1.6 bil­lion so far this year, and has just $1.5 bil­lion in cash on hand as it works to pay down $5.3 bil­lion in debt. The finan­cial woes have caused AMD’s stock to fall more than 35 per­cent since the start of the year, a slide that has wiped out nearly $4 bil­lion in share­holder wealth.

The infu­sion, announced Fri­day, is a nec­es­sary jolt for AMD is it hunts for money to fund its coun­terof­fen­sive against Intel Corp., the world’s largest chip maker, and amid a huge spike in invest­ments in U.S. com­pa­nies from Mid­dle East­ern nations.

Mid­dle East­ern invest­ments in U.S. com­pa­nies has increased more than five­fold in 2007, leap­ing from $4.5 bil­lion on 32 deals last year to nearly $25 bil­lion on 42 deals so far this year, accord­ing to data com­piled by Thom­son Financial.

The money invested in the past two years is more than the entire total invested from 1990 to 2005, accord­ing to the lat­est Thom­son data. Dur­ing that period, $24.8 bil­lion in invest­ments were made in 258 deals.

Oil-rich coun­tries have been enriched fur­ther in recent months by a run-up in the price of a bar­rel of oil, which has been hov­er­ing in the $90 range while many U.S. stocks con­tinue to suf­fer from the hous­ing and lend­ing morass that’s led some banks to absorb bil­lions of dol­lars in losses.

The biggest deal so far this year involv­ing Mid­dle East­ern firms was Gen­eral Elec­tric Co.‘s $11.6 bil­lion sale of its plas­tics divi­sion, com­pleted in August, to petro­chem­i­cals man­u­fac­turer Saudi Basic Indus­tries Corp., a pub­lic com­pany based in Riyadh that is 70-pecent owned by the Saudi Ara­bian government.

Firms based in the United Arab Emi­rates, a fed­er­a­tion of seven oil-rich states, have invested nearly $10 bil­lion in real estate, finan­cial, power gen­er­a­tion and other types of com­pa­nies in the United States.

Ear­lier this year, Mubadala bought a 7.5 per­cent stake in the man­age­ment oper­a­tions of private-equity firm Car­lyle Group for $1.35 bil­lion, and this week unveiled a part­ner­ship with mil­i­tary con­trac­tor Northrop Grum­man Corp. to col­lab­o­rate on aero­space and avi­a­tion technologies.

The deal with AMD makes the Abu Dhabi government-run invest­ment fund AMD’s third-largest share­holder, accord­ing to AMD’s lat­est reg­u­la­tory fil­ings, a devel­op­ment that AMD vows will not trig­ger a review by the U.S. gov­ern­ment because it’s a minor­ity invest­ment and Mubadala will not get a board seat.

How­ever, some experts doubt that claim, cit­ing the sen­si­tiv­ity of AMD’s tech­nol­ogy, which besides being used widely in con­sumer per­sonal com­put­ers and cor­po­rate servers is also used in Defense Depart­ment com­put­ers and other gov­ern­ment machinery.

John Reynolds, an attor­ney at Wiley, Rein & Field­ing in Wash­ing­ton, said the trans­ac­tion could face scrutiny by Com­mit­tee on For­eign Invest­ment in the U.S., or CFIUS, a 12-member panel headed by the Trea­sury Depart­ment, because the U.S. gov­ern­ment is very inter­ested in acqui­si­tions by government-run invest­ment funds, known as sov­er­eign wealth funds, such as Mubadala.

China, Saudi Ara­bia and other Mid­dle East­ern and Asian coun­tries have set up such funds, which con­trol an esti­mated $2.5 tril­lion in assets.

In addi­tion, if AMD has gov­ern­ment con­tracts for clas­si­fied work, inter­est from CFIUS and Con­gress “is apt to be con­sid­er­able, even if the invest­ment is non-controlling,” Reynolds said.

Gen­er­ally, pas­sive invest­ments of less than 10 per­cent of a company’s shares do not trig­ger review by CFIUS. But that is not a hard-and-fast rule, Reynolds said, and an own­er­ship stake below 10 per­cent is not auto­mat­i­cally shielded from review.
AMD shares slid 6 cents to $12.64 in Fri­day trading.