The government of Abu Dhabi has taken an 8.1 per cent stake in AMD.

Under the terms of the deal, AMD will receive roughly $622m from the sale of 49 million shares at $12.70 each.

AMD plans to use the cash to fund research and development along with manufacturing operations.

The purchase was made by Mubadala, an investment firm owned by the Abu Dhabi government. Other Mubadala holdings include a shipbuilding business, an aircraft leasing company, and a stake in Dutch automobile manufacturer Spyker.

AMD stressed that the deal would not give Mubadala a controlling stake in the company, nor allow the firm to take a seat on the board.

The deal will provide a welcome influx of cash for AMD. The company has posted more than $1.9bn in losses so far this year as it struggles in the battle with rival Intel.

The chipmaker has spent much of the year playing catch-up as Intel has enjoyed an exclusive market for its quad-core processors.

AMD released its quad-core Barcelona line in September, which many said was superior to Intel's, only to be bested again in November by the launch of Intel's 45nm Penryn.

AMD will be releasing a 45nm chip developed in partnership with IBM, Toshiba and Sony sometime in 2008.