[International] AMD relinquishes stake in Globalfoundries

Advanced Micro Devices Inc. said Sunday (March 4) it agreed to relinquish its remaining 14 percent stake in Globalfoundries Inc. and to pay Globalfoundries $425 million as part of an amended foundry supply agreement between the two firms that will enable AMD to use another foundry provider at the 28-nm node.

Globalfoundries (Milpitas, Calif.) agreed to waive a contractual requirement for AMD to have its 28-nm accelerated processing units (APUs) built by Globalfoundries for an specified time period. Reports circulated late last year that AMD had decided to cance the 28-nm APUs that Globalfoundries was to build for the firm and use 28-nm gate-last high-k metal-gate manufacturing process technology from Taiwan Semiconductor Manufacturing Co. Ltd.

At the time the reports circulated in November, some speculated that AMD wanted to part ways with Globalfoundries at 28-nm because Gloablfoundries' 28-nm process wouldn't be ready for volume production until the middle of 2012. But others suggested that AMD was nervous about ongoing yield issues at advanced nodes at Globalfoundries. AMD blamed poor yields at the 32-nm node at Globalfoundries when it issued a third quarter profit warning last year, and the 32-nm yield issues were also reportedly to blame for Globalfoundries' management shakeup last summer, when original CEO Doug Grose was replaced by Ajit Manocha.  

"Today marks the start of a new era for Globalfoundries as it becomes a truly independent foundry," Manocha through a statement issued Sunday (March 4).

In a separate statement, AMD CEO Rory Read said AMD was still 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 our delivery requirements across our product line," Read said.

Under the revised agreement, AMD is no longer required to make a quarterly payment to Globalfoundries based on the availability of 32-nm capacity in 2012. Those payments, which AMD said were expected to amount to about $430 million total, were part of an amended foundry supply agreement the two firms agreed to in 2011, amid 32-nm yield issues.

AMD said Sunday the two companies also established a wafer price mechanism with negotiated prices based on a take or pay arrangement in 2012, established a framework for wafer pricing in 2013.

Globalfoundries said AMD's 32-nm processor shipments increased by more than 80 percent from the third quarter to the fourth quarter and now represent a third of AMD's overall processor mix. Globalfoundries said it exited 2011 as the only foundry to have shipped more than 100,000  32-nm high k metal gate wafers.

The $425 million payment from AMD to Globalfoundries will be structured as follows: AMD will pay $150 million Monday, another $50 million by July 2, another $50 million by Oct. 2 and $175 million in the first quarter of 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 cash payment and a $278 million non-cash charge based on transferring all of its remaining ownership interest in Globalfoundries.

AMD owned 34 percent of Globalfoundries at the time of the spin off, but has decreased its stake in the firm several times through various transactions, most recently in December 2010 when Abu Dhabi's Advanced Technology Investment Co. (ATIC) bought Chartered Semiconductor and folded it in to Globalfoundries. ATIC now has 100 percent ownership of Globalfoundries.

Abu Dhabi's Advanced Technology Investment Co. (ATIC)
Source: EETimes