Advanced Micro Devices Inc. (NYSE: AMD) has been struggling with $5 billion in debt, operating losses and frightening competition from larger rival Intel (NASDAQ: INTC). For the last year, it has looked like the company might not stay independent.

Now, it has fashioned it own rescue package and it appears that it will work, perhaps extraordinarily well.

AMD will spin off its capital intensive manufacturing operation and become a chip design operation. According to the FT, "AMD plans to create a new enterprise, initially called The Foundry Company, with Abu Dhabi's Advanced Technology Investment Company (ATIC)." The new venture would have capital to expand it plants

ATIC would make new investments in the operation of as much as $6 billion and part of AMD's huge debt would be passed off to the new entity

Former AMD CEO Hector Ruiz, who nearly ruined his company, will get to be chairman of The Foundry Company. It is hard to imagine how he talked AMD and Abu Dhabi investment executives into that. His incompetence has been almost without boundaries.

AMD's investors, who have been crushed by management's actions for over two years can ask a very good question. "What took so long?" AMD has been talking about getting out of the manufacturing business for over two years. In early 2006, AMD traded near $40. Now it is just above $4.

It was an ugly show and shareholders have had a front row seat.

Douglas A. McIntyre is an editor at 247wallst.com.