Tuesday, April 5th 2011

AMD Amends Wafer Supply Agreement with GLOBALFOUNDRIES

AMD (NYSE: AMD) announced that it amended its Wafer Supply Agreement (WSA) with GLOBALFOUNDRIES Inc. The primary purpose of the amendment was to revise the pricing methodology applicable to wafers delivered in 2011 for AMD’s microprocessor and accelerated processing unit (APU) products. The amendment also modified AMD’s existing commitments regarding future increases in production of certain graphics processing unit (GPU) and chipset products at GLOBALFOUNDRIES.

Under the amended agreement, GLOBALFOUNDRIES has committed to provide AMD with, and AMD has committed to purchase, a fixed number of 45nm and 32nm wafers per quarter in 2011. AMD will pay GLOBALFOUNDRIES fixed prices for 45nm wafers delivered in 2011. AMD’s price for 32nm products will be based on good die.

In addition, AMD also agreed to pay an additional quarterly amount to GLOBALFOUNDRIES during 2012 if GLOBALFOUNDRIES meets specified conditions related to continued availability of 32nm capacity as of the beginning of 2012.

For 2012, AMD will resume compensating GLOBALFOUNDRIES on a cost-plus basis to manufacture wafers for its microprocessor and APU products. AMD currently estimates that it will pay GLOBALFOUNDRIES approximately $1.1 to $1.5 billion in 2011 and $1.5 to $1.9 billion in 2012 for wafer purchases under the amended WSA. In 2010,

AMD paid GLOBALFOUNDRIES approximately $1.2 billion for wafer purchases. In addition, and unrelated to the WSA amendment, AMD began accounting for its investment in GLOBALFOUNDRIES under the cost method as of the first fiscal quarter of 2011. This transition was triggered by the contribution of Chartered Semiconductor to GLOBALFOUNDRIES and amendments to certain agreements. As a result of this contribution AMD will recognize a noncash gain in its first fiscal quarter 2011 financial results, net of certain costs, of approximately $492 million. The noncash gain is related to the dilution of its equity interest in GLOBALFOUNDRIES and will be reflected in the Equity in net income (loss) of investee line of its Consolidated Statement of Operations.
Add your own comment

2 Comments on AMD Amends Wafer Supply Agreement with GLOBALFOUNDRIES

#1
makwy2
AMD currently estimates that it will pay GLOBALFOUNDRIES approximately $1.1 to $1.5 billion in 2011 and $1.5 to $1.9 billion in 20121
Wow! They really do plan ahead! In fact they've already projected costs 18,110 years from now, I wonder how the world ending in 2012 affected their analysis. :)
Posted on Reply
#2
X1REME
by: makwy2
Wow! They really do plan ahead! In fact they've already projected costs 18,110 years from now, I wonder how the world ending in 2012 affected their analysis. :)
its an estimate, duh :slap:

This is a way of GF ramping out a new pricing standard across the industry? If AMD/GF deals are done on this basis in future then you can imagine the following happening very shortly:

TSMC’s customers turn around and say “hey, either give us a (good) cost/good chip deal or we’re off to GF”.

Which is pretty important considering TSMC’s yield performance at 40nm and their lack of yield performance at 32nm… cos they scrapped it.
Posted on Reply