AMD Gives Up Remaining Globalfoundries Shares, Pays $425M

News
By Douglas Perry
published

There is a new agreement between AMD and GlobalFoundries that transfers AMD's remaining 8.8 percent ownership in the foundry to ATIC.

As a result, AMD has become a fabless chip designer as of today. AMD announced in October 2008 that it would spin off its manufacturing business as part of a restructuring effort.

Additionally, GlobalFoundries and AMD agreed to end an agreement that gave GlobalFoundries the exclusive right to manufacture "certain 28 nm products", which opens the door for AMD to approach other foundries to balance its processor manufacturing strategy and secure capacity as well as supply. The new agreement, which will require AMD to pay GlobalFoundries $425 million in cash, also includes a term that releases AMD from quarterly payment obligations of GlobalFoundries as part of a contract that was signed last year.

In a prepared statement, AMD CEO Rory Read was quoted saying that "the amended wafer supply agreement demonstrates that AMD and GlobalFoundries remain committed as long-term strategic business partners. 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."

It appears that AMD is going to great lengths to get out of the exclusivity agreements with GlobalFoundries. The company said that the move will cost about $703 million in total - which includes a non-cash charge of $278 million in addition to the $425 million cash payment.

Douglas Perry
28 Comments Comment from the forums
  • ikefu
    Maybe Global Foundries will finally have some pressure to get their yields up to par with other fabs around the world. Intel is bashing AMD over the head with their fabs since AMD was stuck with the lack luster efforts of GF.
    Reply
  • ChiefTexas_82
    Global Foundries, You ARE the weakest link! Goodbye!
    Reply
  • bloc97
    Ah... I see, they wanted an break to play Crysis in secret. :P
    Reply
  • de5_Roy
    now amd will soar in the sky, flying through all the negativism, like a shining bright light amidst monopoly, price fixing and underhanded tactics. they will make so much profit that intel will be caught off guard. amd will bathe in the sweet water of success.
    Reply
  • nforce4max
    I wish that AMD didn't have to pay any thing at considering how much they have lost over the years because of GF. Poor yields and semi functional samples that amd is often forced to sell into retail channels is killing the company.
    Reply
  • fuzzion
    The last AMD product i used was the thunderbird. Ah the good ol days when you could brag to your friends that AMD was the best gaming CPU with awesome floating point calculations.
    Reply
  • slabbo
    nforce4maxI wish that AMD didn't have to pay any thing at considering how much they have lost over the years because of GF. Poor yields and semi functional samples that amd is often forced to sell into retail channels is killing the company.
    ya, i totally agree, it should be the other way around. GF should be paying AMD for all the crap they caused, and AMD is giving up its shares of the company, they just can't get a break.
    Reply
  • theuniquegamer
    Very very wisely decided by AMD to break relation ship with that faulty wafer manufacturer (GF). Because of them AMD has to sell lock the faulty cores of a quad cores and sell it at a lower price of a dual core.
    Reply
  • cookoy
    Reading only the headline: You give up your remaining shares in GF and you pay $425m. Confusing. Then you read the details: You have a new agreement to pay the $425m to end an old exclusivity agreement with GF. You're pleased with GF performance yet you're willing to pay $703m to get the f* out of an exclusivity deal with them.
    Reply
  • fuzznarf
    it was well worth it for AMD to get out. A small price to pay for the flexibility and security that comes with diversifying amongst 3rd party manufacturing. Not only can AMD now shop other chip manufacturers, but they are now able to set up AMD-controlled production if needed. I wouldn't be surprised if AMD started to set up their own gpu production within the next 2 years.
    Reply