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AMD sets GlobalFoundries free

AMD sets GlobalFoundries free

GlobalFoundries might be free, but it's also lost the exclusivity agreement it held for AMD's APU manufacturing.

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.

8 Comments

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Harlequin 5th March 2012, 13:39 Quote
finally they can stop subsidising GF.... been a big negative on the balance sheet for a few years now
Nikumba 5th March 2012, 14:51 Quote
So if they are now spun off, who holds the x86 licence AMD or GF?
Harlequin 5th March 2012, 15:13 Quote
AMD ofc - GF are a fab company
warejon9 5th March 2012, 16:16 Quote
Do you think AMD if they return to make a massive profit will ever build their own fabs again?
DbD 5th March 2012, 17:23 Quote
Bit surprised to find they are paying GF $425 million? Normally you just sell shares to make money - I take it that's not going to happen in this case unless the shares are worth more then $425 million.

That said I bet the accountants are able to put the share costs and the GF payoff fee on different lines of the balance sheet to make it look like AMD made lots of money.
fluxtatic 6th March 2012, 06:28 Quote
Quote:
Originally Posted by Nikumba
So if they are now spun off, who holds the x86 licence AMD or GF?

As Harlequin said, AMD. That's one of their few postives right now - they're one of 3 x86 license holders on the planet. That said, I don't know that competition would be particularly fierce if AMD decided to give it up tobecome ATI again (in practice, if not in name.) If they don't get their act together within the next couple generations, watch the rumor mill spin up on that one.

If GF is doing so well, what's the motivation here? Seems like that would have been a healthy contribution to the balance sheet. Is it as DbD said, where they're playing some accounting tricks to make it look like they just made a killing? Buying out SeaMicro seems like a good sign, in a way - they're not afraid to drop some cash to get into a new market. Maybe I'm just hoping for a repeat of the glory days when Intel made a stupid mistake and AMD stomped them for a couple years <sigh>
Harlequin 6th March 2012, 07:52 Quote
Flux - AMD are going down the road of Fusion - something that intel cant compete with ; an ARM offeringis in the works (mirco server company purchase leaing there) , and full SoC.
Xir 14th March 2012, 19:37 Quote
Strange...but the decision to go fabless was strange from the beginning.
(As AMD had a very close knit design-and-production system, with the chip designs basically built around what they could manufacture)
They also tried outsourcing before and failed miserably.

It'd be interesting to know how manny percent of GF's manufacturing is AMD-based.
I don't know it for sure but I hear it's well over 90%, which makes the entire spin-off a financial dabble at best.
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