SANTA CLARA, Calif.—Despite an amended wafer supply agreement that gives Advanced Micro Devices Inc. (AMD) the right to use other foundries to make its 28-nm accelerated processing units (APUs), Globalfoundries Inc. expects AMD to increase its business with the firm in 2012.
AMD expects to spend about $1.5 billion on wafers processed by Globalfoundries in 2012, up from about $900 million in 2011, said Michael Noonen, senior vice president of sales, market and quality at Globalfoundries, in an interview at the Common Platform Alliance Technology Forum here Wednesday (March 14).
Earlier this month, AMD and Globalfoundries announced an amended wafer supply agreement by which Globalfoundries waived a requirement that AMD's 28-nm APUs be manufactured at Globalfoundries. In exchange, AMD will pay Globalfoundries a cash payment of $425 million and transferred its remaining stake in Globalfoundries back to Globalfoundries. AMD said it would take a $278 million charge associated with the equity stake transfer.
With AMD willing to pay $425 million and give up its remaining stake in Globalfoundries for the right to have its 28-nm APUs manufactured by other foundries, the news was widely interpreted as the beginning of the end of the relationship between AMD and its former manufacturing unit, which was spun out in 2009.
But in a conference call with analysts following the announcement last week, Thomas Siefert, AMD's chief financial officer, said that AMD plans to spend about $1.5 billion with Globalfoundries in 2012 and that the company will have 28-nm products manufactured at both Globalfoundries and rival Taiwan Semiconductor Manufacturing Co. (TSMC).
Seifert also painted a picture of an improving relationship with the two companies after it was strained by yield issues at 32-nm. "We are really happy with the progress both parties have been making and the trajectory with which we enter into this year on the technology nodes," Seifert said. "And I think the agreement is not less but also not more than putting really a mutually beneficial agreement in place that allows us to better balance risk moving forward but also gives Globalfoundries the ability to further diversify their customer base."
Noonen, who joined Globalfoundries in January after more than three years with NXP Semiconductors, noted that it was always a goal for Globalfoundries to separate itself completely from AMD, though he acknowledged that the structure of the deal may not have been the way it was originally envisioned.
Noonen said new management at both companies—the appointment of Ajit Manocha as CEO of Globalfoundries and Rory Read as CEO of AMD—set a new tone for a healthier relationship between the two companies after the difficulties last year, when poor 32-nm yields at Globalfoundries cut into AMD's sales. The amended wafer supply agreement and AMD's divestiture of its equity stake in Globalfoundries further improves the working relationship between the two, he said.
"I want to compete for their business as opposed to it being contractually obligated," Noonen said. "That's always a stressful situation." Noonen added that disentangling a spinout from its former parent company is always a difficult situation.
"Now with the business arrangements we have, it's a much healthier basis and one that allows us to highlight that we want to be the best supplier we can be to AMD," Noonen said.
It's great to see the ex-NXP executive Mike Noonen come back to a public stage and articulate Globalfoundries' strategies here.
What we want to know more is Globalfoundries' plan in Japan.
Nikkei, Japan’s economic journal, reported last month that Japan’s big three electronics companies -- Fujitsu, Panasonic, Renesas -- will spin off their chip manufacturing divisions and create a new entity focused on production.
That joint venture, according to the report, will receive a huge capital infusion from a Japanese government-backed investment fund called Innovation Network Corp. of Japan (INCJ), and Globalfoundries is reportedly expected to become a part of that joint venture.
We have not heard much from Japan on this matter. But we are expecting some news to break early April, as Japan closes its fiscal year in March.
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