Abu Dhabi's Mubadala Development said on Friday it had bought 8.1 percent of U.S.-based Advanced Micro Devices, the second-largest maker of computer processors.
"We have already bought the stake as of today," Mubdala's chief operating officer, Waleed al-Mokarrab al-Muhairi, told Reuters in a text message.
He did not say how much Mubadala, owned by the government of the world's sixth-largest oil exporter, had paid for the stake.
Advanced Micro Devices said in a registration statement with the U.S. Securities and Exchange Commission on Thursday it would sell up to $700 million in common stock and use the proceeds for general corporate purposes.
An 8.1 percent stake in AMD would be worth more than $550 million at the stock's last traded price.
The deal would cost Mubadala about $700 million, The Financial Times said on Friday, citing people close to the situation.
The California-based company was likely to welcome the investment after reporting its fourth consecutive quarter of losses last month in the face of competition from rival Intel, the world's biggest chipmaker, the paper said.
Still the deal could attract the attention of the U.S. Committee on Foreign Investment, which vets acquisitions by overseas investors, particularly in technology and defence companies, on national security grounds, it said.
A spokesman for Advanced Micro Devices declined to comment on a deal, and said that, contrary to the Financial Times report, the company's work did not include government contracts.
AMD has been strapped for cash since its $5.4 billion purchase of Canadian graphics chip company, ATI.