AMD sets GlobalFoundries free

March 5, 2012 // 1:22 p.m.

Tags: #amd #apu #atic #cpu #fabless #fabricator #foundry #globalfoundries

Silicon shaper GlobalFoundries has officially declared independence from its once-and-former master AMD, agreeing terms to acquire the company's stake in the spin-off foundry.

GlobalFoundries was born in 2008 when AMD decided to quit the foundry game and become a fabless semiconductor company. In partnership with the Advanced Technology Investment Company (ATIC), AMD announced a spin-off company dubbed The Foundry Company.

The Foundry Company would become GlobalFoundries, working with former parent and partial owner AMD to produce the company's processors while also looking to make chips for third-party companies. Since then, GlobalFoundries has been a major success with more than $3 billion capital expenditure planned in 2012 alone for expansion of manufacturing facilities in Singapore, Germany and New York.

Splitting the company off from AMD has also allowed GlobalFoundries to look at deals it couldn't have considered as part of AMD. A partnership with British low-power chip giant ARM has seen GlobalFoundries work on the first Cortex-A9 chip running at more than 2.5GHz as well as the first 28nm Cortex-A9 processor optimisation pack (POP) designed for low-power 2GHz chip manufacturing.

AMD has still retained its stake in the company, however. At least, until now.

'Today marks the start of a new era for GlobalFoundries as it becomes a truly independent foundry,' claimed GlobalFoundries chief executive Ajit Manocha during the announcement. '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.'

Terms of the deal have not been disclosed, but AMD isn't abandoning its child: an amended wafer supply agreement with GlobalFoundries sees the pair agreeing to work together for the foreseeable future. 'The amended wafer supply agreement demonstrates that AMD and GlobalFoundries remain committed as long-term strategic business partners,' claimed AMD's chief executive Rory Read. '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.'

The revised agreement isn't all good news for GlobalFoundries, however. Under the new terms, AMD is let off its requirement of quarterly payment terms while GlobalFoundries loses the exclusivity agreement on 28nm accelerated processing unit (APU) products. This latter is a serious blow to the company, and will likely fuel rumours of yield issues at GlobalFoundries' plants.

As a result of the loss of exclusivity, however, AMD has agreed to pay the foundry $425 million in cash, spread across 2012 and the first quarter of 2013.

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