The Amendment Delivers a Pricing Model That Better Aligns to AMD's Business and Incentivizes GLOBALFOUNDRIES to Continue Improving 32nm Yields
SUNNYVALE, CA, Apr 03, 2011 (MARKETWIRE via COMTEX) --
AMD (NYSE: AMD) today announced that it amended its Wafer Supply
Agreement (WSA) with GLOBALFOUNDRIES Inc. The primary purpose of the
amendment was to revise the pricing methodology applicable to wafers
delivered in 2011 for AMD's microprocessor and accelerated processing
unit (APU) products. The amendment also modified AMD's existing
commitments regarding future increases in production of certain
graphics processing unit (GPU) and chipset products at
GLOBALFOUNDRIES.
Under the amended agreement, GLOBALFOUNDRIES has committed to provide
AMD with, and AMD has committed to purchase, a fixed number of 45nm
and 32nm wafers per quarter in 2011. AMD will pay GLOBALFOUNDRIES
fixed prices for 45nm wafers delivered in 2011. AMD's price for 32nm
products will be based on good die.
In addition, AMD also agreed to pay an additional quarterly amount to
GLOBALFOUNDRIES during 2012 if GLOBALFOUNDRIES meets specified
conditions related to continued availability of 32nm capacity as of
the beginning of 2012.
For 2012, AMD will resume compensating GLOBALFOUNDRIES on a cost-plus
basis to manufacture wafers for its microprocessor and APU products.
AMD currently estimates that it will pay GLOBALFOUNDRIES
approximately $1.1 to $1.5 billion in 2011 and $1.5 to $1.9 billion
in 2012(1) for wafer purchases under the amended WSA. In 2010, AMD
paid GLOBALFOUNDRIES approximately $1.2 billion for wafer purchases.
In addition, and unrelated to the WSA amendment, AMD began accounting
for its investment in GLOBALFOUNDRIES under the cost method as of the
first fiscal quarter of 2011. This transition was triggered by the
contribution of Chartered Semiconductor to GLOBALFOUNDRIES and
amendments to certain agreements. As a result of this contribution
AMD will recognize a noncash gain in its first fiscal quarter 2011
financial results, net of certain costs, of approximately $492
million. The noncash gain is related to the dilution of its equity
interest in GLOBALFOUNDRIES and will be reflected in the Equity in
net income (loss) of investee line of its Consolidated Statement of
Operations.
AMD Teleconference
AMD will hold a conference call for the financial
community at 5:30 a.m. PT (8:30 a.m. ET) on Monday, April 4, 2011 to
discuss the Wafer Supply Agreement amendment. AMD will provide a real
time audio broadcast of the teleconference on the Investor Relations
page of its Web site at AMD. The webcast will be available for 30
days after the conference call.
About AMD
AMD (NYSE: AMD) is a semiconductor design innovator
leading the next era of vivid digital experiences with its
ground-breaking AMD Fusion Accelerated Processing Units (APUs). AMD's
graphics and computing technologies power a variety of solutions
including PCs, game consoles and the servers that drive the Internet
and businesses. For more information, visit http://www.amd.com.
Cautionary Statement
This release contains forward-looking
statements concerning AMD, its estimated payments to GLOBALFOUNDRIES
in 2011 and 2012 for wafer purchases under the Wafer Supply Agreement
and a noncash gain in the first fiscal quarter of 2011, which are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are
commonly identified by words such as "would," "may," "expects,"
"believes," "plans," "intends," "projects," and other terms with
similar meaning. Investors are cautioned that the forward-looking
statements in this release are based on current beliefs, assumptions
and expectations, speak only as of the date of this release and
involve risks and uncertainties that could cause actual results to
differ materially from current expectations. Material factors and
assumptions that were applied in making these forward looking
statements include, without limitation, AMD's current expectations
regarding GLOBALFOUNDRIES manufacturing yields and wafer volumes, and
demand for its products. Risks include the possibility that Intel
Corporation's pricing, marketing and rebating programs, product
bundling, standard setting, new product introductions or other
activities targeting the company's business will prevent attainment
of the company's current plans; the company will be unable to
develop, launch and ramp new products and technologies in the volumes
and mix required by the market and at mature yields on a timely
basis; GLOBALFOUNDRIES will be unable to manufacture the company's
products on a timely basis in sufficient quantities and using
competitive technologies; the company will be unable to obtain
sufficient manufacturing capacity or components to meet demand for
its products or will under-utilize its commitment with respect to
GLOBALFOUNDRIES' microprocessor manufacturing facilities; the company
will be unable to transition its products to advanced manufacturing
process technologies in a timely and effective way; global business
and economic conditions will not continue to improve or will worsen
resulting in lower than currently expected demand; demand for
computers and consumer electronics products and, in turn, demand for
the company's products will be lower than currently expected;
customers stop buying the company's products or materially reduce
their demand for its products; the company will require additional
funding and may not be able to raise funds on favorable terms or at
all; there will be unexpected variations in market growth and demand
for the company's products and technologies in light of the product
mix that it may have available at any particular time or a decline in
demand; and the company will be unable to maintain the level of
investment in research and development that is required to remain
competitive. Investors are urged to review in detail the risks and
uncertainties in the company's Securities and Exchange Commission
filings, including but not limited to the Annual Report on Form 10-K
for the year ended December 25, 2010.
AMD, the AMD Arrow logo, Radeon, and combinations thereof, are
trademarks of Advanced Micro Devices, Inc. DirectX is a trademark of
Microsoft Corporation. Other names are for informational purposes
only and may be trademarks of their respective owners.
(1) AMD based its 2011 and 2012 estimated costs in part on AMD's
current expectations regarding GLOBALFOUNDRIES manufacturing yields
and wafer volumes. These costs could increase or decrease as a result
of variations in those yields and several other factors including
AMD's current expectations regarding demand for products. AMD is not
able to meaningfully quantify or estimate purchase obligations from
GLOBALFOUNDRIES beyond 2012, but it expects that future purchases
from GLOBALFOUNDRIES under the Wafer Supply Agreement will continue
to be material.
EDITORIAL CONTACT:
Drew Prairie
(512) 602-4425
Email Contact
INVESTOR CONTACT:
Ruth Cotter
(408) 749-3887
Email Contact
SOURCE: Advanced Micro Devices
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