AMD Sells Remaining Stake in Globalfoundries

Globalfoundries Becomes Fully Independent of AMD

by Anton Shilov
03/04/2012 | 10:11 PM

Globalfoundries has announced it has agreed to terms with Advanced Micro Devices to acquire the remaining stake in Globalfoundries, fulfilling the company's long-term vision of becoming an independent contract maker of semiconductors. AMD and Globalfoundries also signed a new wafer supply agreement, which defines pricing and volumes of chips that GF makes for the chip designer.


The agreement, part of an amendment to the commercial wafer supply agreement (WSA) with AMD, positions Globalfoundries as a pure-play, semiconductor foundry company with AMD as one of its primary and strategic customers. Globalfoundries will now be wholly owned by the Advanced Technology Investment Company (ATIC).

"Today marks the start of a new era for Globalfoundries as it becomes a truly independent foundry. Globalfoundries has a clear vision to be the leading semiconductor foundry partner to AMD and one of the world's top technology companies. We continue to execute on our strategy to propel ATIC's long-term investment philosophy into true value creation for our shareholder and customers," Ajit Manocha, chief executive officer of Globalfoundries.

The acquisition of shares is part of a revised WSA for 2012 between Globalfoundries and AMD aimed at strengthening their strategic business partnership and commitment to delivering leading-edge technology solutions.

"AMD's 32nm processor shipments increased by more than 80% from the third quarter to the fourth quarter and now represents a third of AMD's overall processor mix. In fact, Globalfoundries exited 2011 as the only foundry to have shipped in the hundreds of thousands of 32nm HKMG wafers," added Mr. Manocha.

Globalfoundries waived the exclusivity arrangement for AMD to manufacture certain 28nm APU products at GF 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.

In January, Globalfoundries announced plans for more than $3 billion in capital spending in 2012 to fund expansion of its facilities in Singapore, Germany and New York.  Also in January, the company announced that its newest 300mm manufacturing facility, Fab 8 in New York, started running the first silicon as part of a new customer agreement to develop chips for IBM.

The contract maker of chips achieved several significant milestones in its longstanding partnership with ARM, including the industry's first Cortex-A9 processor operating at more than 2.5GHz on 28nm high-performance technology, and the first 28nm ARM Cortex-A9 processor optimization pack (POP) capable of up to 2GHz on a low-power process geared toward smartphones and other mobile application.