Global Foundries Inc. is expected to announce its first new customer within the next three to four weeks, giving the wafer supplier an opportunity to broaden its revenue base outside of sales to former parent Advanced Micro Devices Inc.
Since its spin off by AMD as an independent foundry, the wafer supplier has been trying to add new customers to reduce its reliance on AMD for the majority of its sales. Company executives did not disclose details of discussions with potential customers but indications are that talks are at an advanced stage, according to industry sources.
AMD's shareholding interest in Global Foundries is also expected to drop further in coming months as the company moves to shore up its cash reserves. Global Foundries is expected to call on shareholders to increase capital contribution to the foundry towards the end of the year but AMD has indicated it will not participate in the additional round of funding.
Executives at Sunnyvale, Calif.-based AMD admitted the computer microprocessor and graphics IC vendor's stake in Global Foundries would decline if the company failed to participate in Global Foundries' next round of funding. AMD has been moving to conserve cash and has been preparing shareholders for the reduction in their interest in Global Foundries, according to AMD executives.
"Through the first half of the year there was no capital calls [from Global Foundries] but there will be a capital call in the back half of the year and our current view from an AMD perspective is that we will not participate in that capital call," said Robert Rivet, AMD's CFO during a conference call to discuss the company's second quarter results.
Global Foundries ended the June quarter with about $877 million in cash and marketable securities, down from $1.12 billion at the end of the March quarter. The company was mandated by its controlling shareholders to maintain cash of approximately $1 billion on a constant basis and is likely to ask the owners to make up any difference by the end of the year, Rivet said.
"As we launched the company we targeted that they should maintain around $1 billion of cash," Rivet said. "You can kind of see in the current quarter results they're slightly below that, so that kind of gives you at least a framework [for how much cash they need to raise from stockholders.]"