AMD gives up remaining shares in GlobalFoundries, amends wafer supply agreement

By on March 5, 2012, 10:00 AM

Exactly three years after spinning off its semiconductor manufacturing arm into a separate entity called GlobalFoundries, AMD is giving up the remaining of its minority stake to Abu Dhabi-based Advanced Technology Investment Company (ATIC). The agreement announced late Sunday includes a $425 million payment by AMD to GlobalFoundries over two years and a renegotiated wafer pricing.

For 2012, the two firms have agreed on a fixed wafer pricing under a "take or pay" arrangement. They've also established a framework for wafer pricing in 2013, and agreed that AMD's additional 2012 quarterly payment obligations specified in the 2011 amendment, totaling $430 million, will be waived.

Although AMD will remain one of GlobalFoundries' key customers, the breakup will give AMD more flexibility in sourcing its chips while GlobalFoundries will be better positioned to diversify its customer base. The first outcome of this is that AMD is no longer bound by an exclusive arrangement to manufacture its 28nm APUs at GlobalFoundries, something that has been rumored since November due to a slow, low-yield production ramp.

AMD expects to record a one-time charge of $703 million in Q1 2012 consisting of the above-mentioned $425 million cash payment to GlobalFoundries and the remainder will be a non-cash charge.

AMD owned 34% of Globalfoundries at the time of the spin off in 2009, but has decreased its stake in the firm several times through various transactions, most recently after a $209 million write-down of its investment in Q4 2011 that left it with an 8.8% stake. ATIC now has 100% ownership of Globalfoundries.

The move is the latest by new CEO Rory Read to refocus AMD. Last week, AMD announced it would acquire Silicon Valley startup SeaMicro in an effort to enter the low-power server market.

User Comments: 3

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raybay said:

That new head of AMD is moving pretty fast in amazing new ways... Wonder what AMD will be like three years from now.

dividebyzero dividebyzero, trainee n00b, said:

That new head of AMD is moving pretty fast in amazing new ways

Yup. Paying $425m in cash plus a $278m write-off to get rid of 8.8% ownership in the worlds third largest semiconductor foundry...amazing is one word for it.

... Wonder what AMD will be like three years from now.

Unrecognizable ?

An AMD spokesman said the agreement allows his company to make some 28-nanometer chips at Taiwan Semiconductor Manufacturing Co. instead of Globalfoundries............As part of the announcement Sunday, the companies said they had agreed on a new mechanism under which they will negotiate prices for processed wafers. Globalfoundries waived a requirement that required AMD to buy wafers based on the next production process

Meanwhile, in the Batcave under stately Read Manor...

Rory Read, AMD's chief executive, said the agreement means the two companies [ AMD and GloFo] "remain committed as long-term strategic business partners."

...which I think is marketspeak for "We're sick of flushing capital down the toilet with GloFo. It's worth paying to lose the 8.8% stake". Makes me wonder how far GF are behind in the game in process and execution in comparison with TSMC (graphics) and Intel (CPU).

cliffordcooley cliffordcooley, TechSpot Paladin, said:


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