AMD Scaling Back Chip Purchases from GlobalFoundries

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To save money, AMD is reducing its wafer order agreement with Globalfoundries.

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Kevin Parrish
Kevin Parrish
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Kevin Parrish has over a decade of experience as a writer, editor, and product tester. His work focused on computer hardware, networking equipment, smartphones, tablets, gaming consoles, and other internet-connected devices. His work has appeared in Tom's Hardware, Tom's Guide, Maximum PC, Digital Trends, Android Authority, How-To Geek, Lifewire, and others.

29 Comments Comment from the forums
  • A Bad Day
    "AMD will make a termination payment of $320 million related to the take-or-pay agreement with Globalfoundries associated with the adjusted wafer purchase commitments in fourth quarter 2012," the company said.

    Ouchy for a faltering company...
    Reply
  • DRosencraft
    Logical step not to buy large quantities of a product you can't manufacture and then sell. If you're not gonna sell as much processors, then no need for all those wafers sitting around. The concern is, what makes this worrying, is the image it sends that AMD is weak and isn't expecting to make any waves next year with any new products. Or from another more optimistic perspective they could be setting themselves up for trouble of supply shortages if they do make a strong come back. AMD is in so much flux right now, but at least they still have some cash reserves and a forthcoming return to profitability in the not too distant future.
    Reply
  • abbadon_34
    They should have cut the prices across the board on all cpu to make them value competative, they could own the first or second SMB if the price was right
    Reply
  • tomfreak
    u cant sell ur chips as much if u cant put aggressive price like u did back then in Athlon64 era.
    Reply
  • A Bad Day
    abbadon_34They should have cut the prices across the board on all cpu to make them value competative, they could own the first or second SMB if the price was right
    It would be stupid to engage in a price war against Intel, who has a much larger cash reserve and better fab plants. They can produce processors at lower profit margins because the manufacturing cost per processor is less than AMD's suppliers.
    Reply
  • jaber2
    Why didn't AMD do like intel and fab own waffers? you'd think they would have better control over engineering and quality, the best thing AMD can do now is spend its energy on the expanding smart phone and tablet market, which Intel just decided to get into
    Reply
  • stickmansam
    jaber2Why didn't AMD do like intel and fab own waffers? you'd think they would have better control over engineering and quality, the best thing AMD can do now is spend its energy on the expanding smart phone and tablet market, which Intel just decided to get intoGlobal Foundries is their old fab but it was getting too much downtime due to low sales so they decided to spin it off so if GF was losing money, it wouldn't effect AMD. What AMD should have done was to fab for other companies to make up the shortfall and not expand the fabs. That way they can keep more of the profit margin in house. Something that sort of make sense back then is coming back to bite them a new one.
    Reply
  • matt_b
    StickmansamGLobal Foundries is their old fab but it was getting too much downtime due to low sales so they decided to spin it off so if GF was losing money, it wouldn't effect AMD. What AMD should have done was to fab for other companies to make up the shortfall and not expand the fabs. That way they can keep more of the profit margin in house. Something that sort of make sense back then is coming back to bite them a new one.You know, I thought the same thing. Of course I am not an insider to AMD to know what all went on, but common sense would say that if you have idle time, down time, or just plain under-utilization, then you try to contract out with other suppliers/businesses to become customers and put a margin of profit back in your pocket. Not only does this give the opportunity to diversify your income (you could be doing poorly while your other customer's demands for chip wafers is skyrocketing), but it also keeps overall quality at a higher level because you still retain production control of your product. It was a bad move back then I thought.
    Reply
  • A Bad Day
    OR, the fab plants that AMD owned cost too much for them to maintain, so they figured why not get rid of it.
    Reply
  • tomfreak
    A Bad DayIt would be stupid to engage in a price war against Intel, who has a much larger cash reserve and better fab plants. They can produce processors at lower profit margins because the manufacturing cost per processor is less than AMD's suppliers.it would be stupid to buy a cpu that is not price competitive against Intel.

    oh of cos I will get thumbdown for this as usual.
    Reply