AMD Gives Up Remaining Globalfoundries Shares, Pays $425M
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.