SAN FRANCISCO -- Advanced Micro Devices Inc said Sunday(March 4) that it agreed to relinquish its remaining 14% stake inGlobalfoundries Inc and to pay Globalfoundries $425 million as part of anamended foundry supply agreement between the two firms that will enable AMD touse another foundry provider at the 28-nm node.
Globalfoundries (Milpitas, Calif) agreed to waive acontractual requirement for AMD to have its 28-nm accelerated processing units(APUs) built by Globalfoundries for a specified time period. Reports circulatedlate last year that AMD had decided to cancel the 28-nm APUs thatGlobalfoundries was to build for the firm and use 28-nm gate-last high-kmetal-gate manufacturing process technology from Taiwan SemiconductorManufacturing Co Ltd.
At the time the reports circulated in November, somespeculated that AMD wanted to part ways with Globalfoundries at 28-nm becauseGloablfoundries' 28-nm process wouldn't be ready for volume production untilthe middle of 2012. But others suggested that AMD was nervous about ongoingyield issues at advanced nodes at Globalfoundries. AMD blamed poor yields atthe 32-nm node at Globalfoundries when it issued a third quarter profit warninglast year, and the 32-nm yield issues were also reportedly to blame forGlobalfoundries' management shakeup last summer, when original CEO Doug Grosewas replaced by Ajit Manocha.
"Today marks the start of a new era for Globalfoundriesas it becomes a truly independent foundry," Manocha through a statementissued March 4.
In a separate statement, AMD CEO Rory Read said AMD wasstill committed to a long-term strategic partnership with Globalfoundries,which was formed from the spin-out of AMD's manufacturing operations in 2009."We made significant progress last year to strengthen our relationship,and we're pleased with Globalfoundries' recent performance in meeting ourdelivery requirements across our product line," Read said.
Under the revised agreement, AMD is no longer required tomake a quarterly payment to Globalfoundries based on the availability of 32-nmcapacity in 2012. Those payments, which AMD said were expected to amount toabout $430 million total, were part of an amended foundry supply agreement thetwo firms agreed to in 2011, amid 32-nm yield issues.
AMD said Sunday the two companies also established a waferprice mechanism with negotiated prices based on a take or pay arrangement in2012, established a framework for wafer pricing in 2013.
Globalfoundries said AMD's 32-nm processor shipmentsincreased by more than 80% from the third quarter to the fourth quarter and nowrepresent a third of AMD's overall processor mix. Globalfoundries said itexited 2011 as the only foundry to have shipped more than 100,000 32-nm high kmetal gate wafers.
The $425 million payment from AMD to Globalfoundries will bestructured as follows: AMD will pay $150 million Monday, another $50 million byJuly 2, another $50 million by October 2, and $175 million in the first quarterof 2013, AMD said. The company said it expects to record a one-time charge of$703 million in first quarter of this consisting of the $425 million cashpayment and a $278 million non-cash charge based on transferring all of itsremaining ownership interest in Globalfoundries.
AMD owned 34% of Globalfoundries at the time of the spinoff, but has decreased its stake in the firm several times through varioustransactions, most recently in December 2010 when Abu Dhabi's AdvancedTechnology Investment Co (ATIC) bought Chartered Semiconductor and folded it into Globalfoundries. ATIC now has 100% ownership of Globalfoundries.
This story was originally posted by EETimes.
