A United Arab Emirates investment group has acquired 8.1% stake in Advanced Micro Devices and effectively became the fourth largest investor in the company. The deal emphasizes growing interest towards the U.S.-based company from foreign investors and may cause questions to AMD from its customers among defense and government organizations.

In a bid to ease financial situation for itself, Advanced Micro Devices, the world’s second largest maker of x86 microprocessors that lost more than $1.5 billion in the most recent twelve months, agreed to sell 8.1% stake in itself to Mubadala Development Company, a strategic investment and development company headquartered in Abu Dhabi, the capital of the United Arab Emirates (UAE). While the deal will give AMD about $600 million, it may attract attention of U.S. Committee on Foreign Investment.

Mubadala invested approximately $622 million, receiving 49 million newly-issued shares at a price per share of $12.70, the closing price of AMD common stock on November 15, 2007. AMD received approximately $608 million, after reimbursing Mubadala for approximately $14.6 million in expenses.

AMD will use the net proceeds from the sale of the shares of common stock for general corporate purposes including “accelerating its long-term, customer-focused growth strategy by investing in research and development (R&D), product innovations and manufacturing excellence”, the company indicated.

“We proudly welcome Mubadala, a world-class investor, to the AMD shareholder family. This investment strengthens AMD’s ability to deliver customer-centric innovation and choice to the marketplace, creating greater value for all of our shareholders,” said AMD chairman and chief executive Hector Ruiz.

But the investment might attract the attention of the U.S. Committee on Foreign Investment, which examines acquisitions by foreign investors. There are currently a lot of concerns about foreign acquisitions of companies which products are used by the USA defense and government organizations. However, given the weak dollar, high oil prices and the fact that the aforementioned organizations use plenty of different high-tech equipment, wealth funds from the oil-rich mid-East region are more than interested in investing of high-tech companies in the States.

It should be kept in mind that in AMD’s case this is a non-controlling investment. Mubadala will not receive any board representation as part of the deal. This transaction does not present a controlling investment or acquisition subject to review by the Committee on Foreign Investment in the U.S. (CFIUS). Still, with 8.1% stake, Mubadala is the fourth largest investor in AMD after Capital Research and Management Company, FMR Corp. and Oppenheimer Funds.

“AMD is a great fit for Mubadala’s investment approach – a spirited competitor and innovator led by a strong and visionary management team. We see significant opportunities for long-term growth and value creation,” said Mubadala chief executive and managing director Khaldoon Khalifa Al Mubarak said.