Monday, March 5th 2012
AMD Amends Wafer Supply Agreement With GLOBALFOUNDRIES
AMD today announced that it entered into an amendment to its Wafer Supply Agreement (WSA) with GLOBALFOUNDRIES Inc. In this amendment, AMD and GLOBALFOUNDRIES agreed to a negotiated wafer price mechanism for 2012. AMD also agreed to transfer its remaining ownership interest in GLOBALFOUNDRIES to GLOBALFOUNDRIES and, as a result, AMD will no longer hold an equity stake in GLOBALFOUNDRIES.
"The amended wafer supply agreement demonstrates that AMD and GLOBALFOUNDRIES remain committed as long-term strategic business partners," said Rory Read, chief executive officer, AMD. "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."
Under the amended agreement:
- AMD and GLOBALFOUNDRIES 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, and agreed that AMD's additional 2012 quarterly payment obligations specified in the 2011 amendment will be waived.
- AMD also agreed to transfer its remaining ownership interest in GLOBALFOUNDRIES to GLOBALFOUNDRIES and, as a result, AMD will no longer hold an equity stake in GLOBALFOUNDRIES.
- GLOBALFOUNDRIES waived the exclusivity arrangement for AMD to manufacture certain 28 nm APU products at GLOBALFOUNDRIES for a specified period. As a result, AMD agreed to pay GLOBALFOUNDRIES a cash payment of $425 million, of which $150 million is being paid on March 5, 2012, $50 million will be paid by July 2, 2012, $50 million by October 2, 2012 and $175 million in the first quarter of 2013. In addition, AMD issued a promissory note to GLOBALFOUNDRIES for the payments due by October 2, 2012 and first quarter 2013.
AMD expects to record a one-time charge of $703 million in Q1 2012 consisting of the above-mentioned $425 million cash payment and the remainder will be a non-cash charge.
AMD's Q1 2012 non-GAAP gross margin guidance of approximately 45% and the 2012 non-GAAP gross margin guidance of 44% - 48% remain unchanged.
"The amended wafer supply agreement demonstrates that AMD and GLOBALFOUNDRIES remain committed as long-term strategic business partners," said Rory Read, chief executive officer, AMD. "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."
Under the amended agreement:
- AMD and GLOBALFOUNDRIES 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, and agreed that AMD's additional 2012 quarterly payment obligations specified in the 2011 amendment will be waived.
- AMD also agreed to transfer its remaining ownership interest in GLOBALFOUNDRIES to GLOBALFOUNDRIES and, as a result, AMD will no longer hold an equity stake in GLOBALFOUNDRIES.
- GLOBALFOUNDRIES waived the exclusivity arrangement for AMD to manufacture certain 28 nm APU products at GLOBALFOUNDRIES for a specified period. As a result, AMD agreed to pay GLOBALFOUNDRIES a cash payment of $425 million, of which $150 million is being paid on March 5, 2012, $50 million will be paid by July 2, 2012, $50 million by October 2, 2012 and $175 million in the first quarter of 2013. In addition, AMD issued a promissory note to GLOBALFOUNDRIES for the payments due by October 2, 2012 and first quarter 2013.
AMD expects to record a one-time charge of $703 million in Q1 2012 consisting of the above-mentioned $425 million cash payment and the remainder will be a non-cash charge.
AMD's Q1 2012 non-GAAP gross margin guidance of approximately 45% and the 2012 non-GAAP gross margin guidance of 44% - 48% remain unchanged.
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