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phoenixdave
dylan.mcgrath
Reports about a TSMC production stoppage at 28-nm appear to have been originated ...
AMD relinquishes stake in Globalfoundries
Dylan McGrath
3/4/2012 10:27 PM EST
SAN FRANCISCO—Advanced Micro Devices Inc. said Sunday (March 4) it agreed to relinquish its remaining 14 percent stake in Globalfoundries Inc. and to pay Globalfoundries $425 million as part of an amended foundry supply agreement between the two firms that will enable AMD to use another foundry provider at the 28-nm node.
Globalfoundries (Milpitas, Calif.) agreed to waive a contractual requirement for AMD to have its 28-nm accelerated processing units (APUs) built by Globalfoundries for an specified time period. Reports circulated late last year that AMD had decided to cance the 28-nm APUs that Globalfoundries was to build for the firm and use 28-nm gate-last high-k metal-gate manufacturing process technology from Taiwan Semiconductor Manufacturing Co. Ltd.
At the time the reports circulated in November, some speculated that AMD wanted to part ways with Globalfoundries at 28-nm because Gloablfoundries' 28-nm process wouldn't be ready for volume production until the middle of 2012. But others suggested that AMD was nervous about ongoing yield issues at advanced nodes at Globalfoundries. AMD blamed poor yields at the 32-nm node at Globalfoundries when it issued a third quarter profit warning last year, and the 32-nm yield issues were also reportedly to blame for Globalfoundries' management shakeup last summer, when original CEO Doug Grose was replaced by Ajit Manocha.
"Today marks the start of a new era for Globalfoundries as it becomes a truly independent foundry," Manocha through a statement issued Sunday (March 4).
In a separate statement, AMD CEO Rory Read said AMD was still committed to a long-term strategic partnership with Globalfoundries, which was formed from the spin-out of AMD's manufacturing operations in 2009. "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," Read said.
Under the revised agreement, AMD is no longer required to make a quarterly payment to Globalfoundries based on the availability of 32-nm capacity in 2012. Those payments, which AMD said were expected to amount to about $430 million total, were part of an amended foundry supply agreement the two firms agreed to in 2011, amid 32-nm yield issues.
AMD said Sunday the two companies also established a wafer price mechanism with negotiated prices based on a take or pay arrangement in 2012, established a framework for wafer pricing in 2013.
Globalfoundries said AMD's 32-nm processor shipments increased by more than 80 percent from the third quarter to the fourth quarter and now represent a third of AMD's overall processor mix. Globalfoundries said it exited 2011 as the only foundry to have shipped more than 100,000 32-nm high k metal gate wafers.
The $425 million payment from AMD to Globalfoundries will be structured as follows: AMD will pay $150 million Monday, another $50 million by July 2, another $50 million by Oct. 2 and $175 million in the first quarter of 2013, AMD said. The company said it expects to record a one-time charge of $703 million in first quarter of this consisting of the $425 million cash payment and a $278 million non-cash charge based on transferring all of its remaining ownership interest in Globalfoundries.
AMD owned 34 percent of Globalfoundries at the time of the spin off, but has decreased its stake in the firm several times through various transactions, most recently in December 2010 when Abu Dhabi's Advanced Technology Investment Co. (ATIC) bought Chartered Semiconductor and folded it in to Globalfoundries. ATIC now has 100 percent ownership of Globalfoundries.
Globalfoundries (Milpitas, Calif.) agreed to waive a contractual requirement for AMD to have its 28-nm accelerated processing units (APUs) built by Globalfoundries for an specified time period. Reports circulated late last year that AMD had decided to cance the 28-nm APUs that Globalfoundries was to build for the firm and use 28-nm gate-last high-k metal-gate manufacturing process technology from Taiwan Semiconductor Manufacturing Co. Ltd.
At the time the reports circulated in November, some speculated that AMD wanted to part ways with Globalfoundries at 28-nm because Gloablfoundries' 28-nm process wouldn't be ready for volume production until the middle of 2012. But others suggested that AMD was nervous about ongoing yield issues at advanced nodes at Globalfoundries. AMD blamed poor yields at the 32-nm node at Globalfoundries when it issued a third quarter profit warning last year, and the 32-nm yield issues were also reportedly to blame for Globalfoundries' management shakeup last summer, when original CEO Doug Grose was replaced by Ajit Manocha.
"Today marks the start of a new era for Globalfoundries as it becomes a truly independent foundry," Manocha through a statement issued Sunday (March 4).
In a separate statement, AMD CEO Rory Read said AMD was still committed to a long-term strategic partnership with Globalfoundries, which was formed from the spin-out of AMD's manufacturing operations in 2009. "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," Read said.
Under the revised agreement, AMD is no longer required to make a quarterly payment to Globalfoundries based on the availability of 32-nm capacity in 2012. Those payments, which AMD said were expected to amount to about $430 million total, were part of an amended foundry supply agreement the two firms agreed to in 2011, amid 32-nm yield issues.
AMD said Sunday the two companies also established a wafer price mechanism with negotiated prices based on a take or pay arrangement in 2012, established a framework for wafer pricing in 2013.
Globalfoundries said AMD's 32-nm processor shipments increased by more than 80 percent from the third quarter to the fourth quarter and now represent a third of AMD's overall processor mix. Globalfoundries said it exited 2011 as the only foundry to have shipped more than 100,000 32-nm high k metal gate wafers.
The $425 million payment from AMD to Globalfoundries will be structured as follows: AMD will pay $150 million Monday, another $50 million by July 2, another $50 million by Oct. 2 and $175 million in the first quarter of 2013, AMD said. The company said it expects to record a one-time charge of $703 million in first quarter of this consisting of the $425 million cash payment and a $278 million non-cash charge based on transferring all of its remaining ownership interest in Globalfoundries.
AMD owned 34 percent of Globalfoundries at the time of the spin off, but has decreased its stake in the firm several times through various transactions, most recently in December 2010 when Abu Dhabi's Advanced Technology Investment Co. (ATIC) bought Chartered Semiconductor and folded it in to Globalfoundries. ATIC now has 100 percent ownership of Globalfoundries.
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MikeSmith2011
3/5/2012 1:25 AM EST
Spells doom for Global Foundries. The ATI division of AMD has already been using TSMC. I suspect the rest of AMD might follow. Does GF have any other customers of significance?
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yalanand
3/5/2012 1:27 AM EST
Did global foundaries solve its poor yields at the 32-nm node ? Will AMD continue to use GF technology or will shift to TSMC for its future projects ?
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dylan.mcgrath
3/5/2012 11:19 AM EST
It appears they have solved the 32-nm issues. They say that they have dramatically increased the shipments of AMD's 32-nm APUs.
Will they continue to work together? There is much discussion here about their continuing strategic partnership, etc. But AMD is basically shelling out more than half a million dollars, including relinquishing its stake in GF, in order to gain the right to use another foundry at 28-nm. So what does that say?
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dylan.mcgrath
3/5/2012 1:09 PM EST
Sorry- make that half a billion dollars above.
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BillSalmond
3/5/2012 7:46 AM EST
Is anyone making a success using an IBM developed process? This is a genuine question. I can't think of anyone.
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pinhead
3/5/2012 5:13 PM EST
Well, IBM is doing OK, and several of the gaming systems used IBM process. Also, Samsung is making a lot of products for Apple using IBM-derived processes.
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BillSalmond
3/5/2012 5:23 PM EST
IBM don't release any figures for their semiconductor division. I suspect that at best they break even. Are Samsung involved in the IBM fab club?
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DrunkenSailor
3/5/2012 8:15 PM EST
Samsungs Logic/Foundry technology is part of IBM's fab club.
One might also recall the announcement of both Samsung and GF offering a "synchronised" 28 nm technology what is based on mentioned fab club.
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pinhead
3/6/2012 2:02 PM EST
http://en.wikipedia.org/wiki/ISDA
See the 2nd line. I guess the list of companies participating in the Fab Club is in the public domain.
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phoenixdave
3/5/2012 12:15 PM EST
Being "truly independent" certainly can bring some long term advantages, but will they be outweighed by the short-term disadvantages? How deep are ATIC's pockets?
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peter.clarke
3/7/2012 1:37 PM EST
I believe at the last count they are $10 billion to $15 billion deep. I think Abu Dhabi has the money to deepen those pockets. They may have to.
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chipmonk
3/5/2012 1:20 PM EST
Does GloFo still depend on IBM for R&D at advanced nodes ? They were doing this as a continuation of AMD policy and got into trouble when following IBM approach to HKMG turned out to be non-scalable.
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Oscar Law
3/5/2012 2:02 PM EST
It is bad news for GF that AMD properly go to other foundry to make 28nm or below APU. GF needs high volume customers for yield learning.
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KB3001
3/5/2012 5:31 PM EST
Very bad news indeed for GF, and more precisely ATIC!
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Frank Eory
3/5/2012 5:48 PM EST
GF will be hungry, and that could result in making them very competitive. Don't write them off just yet.
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me
3/5/2012 6:09 PM EST
Better getting into shape now, this hunger is the hunger to end all hungers.
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KB3001
3/6/2012 4:35 AM EST
May be they should go a step further and stop asking Daddy (ATIC) for more money everytime they are in trouble. That way they will feel the real hunger...
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me
3/6/2012 10:18 AM EST
Well, that would be hard.
But they can be less arrogant, less evasive, friendlier to the ecosystem, and more open to partnership.
Do they have the DNA for that?
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Dr_Trevorkian
3/5/2012 6:15 PM EST
Does this impact their x86 licensing agreement with Intel?
I thought that they were required to fabricate their own x86 chips.
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dylan.mcgrath
3/5/2012 6:57 PM EST
@Dr_Trevorkian- I found this an interesting question and posed it directly to an AMD spokesman. The spokesman reported that the amended deal with Globalfoundries has no implications for its x86 license from Intel. "We have the ability to produce processors anywhere we chose from the perspective of the cross license," the spokesman said.
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KB3001
3/6/2012 7:55 AM EST
Is not this surprising?
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Dr_Trevorkian
3/6/2012 1:52 PM EST
It is interesting because I remember that when they spun off Global Foundries they took a 51% share in it, and had the requirement of having a majority of board members. This was due to the cross licensing agreement, although this may have changed especially with the anti-trust settlement with Intel.
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dylan.mcgrath
3/6/2012 1:59 PM EST
I don't believe that AMD had 51 percent stake originally. Even if you go back to the initial announcement in October 2008, AMD was only going to have about 44 percent of what was then called "The Foundry Company," while ATIC owned by 56 percent.
http://www.globalfoundries.com/newsroom/2008/20081006.aspx
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phoenixdave
3/7/2012 11:32 AM EST
"TSMC halted 28nm production in mid-February according to a report..." Wonder how this will affect AMDs decision?
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peter.clarke
3/7/2012 1:36 PM EST
Any affect on AMD's decision will depend on who you are quoting.
Who are you quoting PhoenixDave?
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dylan.mcgrath
3/8/2012 3:33 AM EST
Reports about a TSMC production stoppage at 28-nm appear to have been originated by the aptly named Semi Accurate. We are checking into it.
http://semiaccurate.com/2012/03/07/tsmc-suddenly-halts-28nm-production/
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phoenixdave
3/7/2012 3:05 PM EST
Thanks Dylan, I was hoping you would follow up..
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dylan.mcgrath
3/8/2012 2:15 AM EST
@phoenixdave (and everyone else)-I've done some checking, and it's my assessment that this report about TSMC halting 28-nm production is inaccurate (not even semi-accurate).
Certainly, TSMC has had some hiccups at 28-nm. But halting production several weeks ago? I don't think so.
TSMC said its policy is not to comment on rumors. But a spokeswoman for the company, Elizabeth Sun, also told me via email that 28-nm production is normal and that customers are fully aware of TSMC's production status.
It was also pointed out to me when I asked around about this that both Xilinx and rival Altera have within the past week or so issued announcements about 28-nm products shipping.
Both use TSMC for manufacturing. Why would either of these companies trumpet 28-nm production if they knew that their foundry supplier had shut down it's 28-nm production lines? I don't see it.
http://press.xilinx.com/phoenix.zhtml?c=212763&p=irol-newsArticle&ID=1667836&highlight=
http://www.altera.com/corporate/news_room/releases/2012/products/nr-stratix5-production.html
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phoenixdave
3/8/2012 6:53 AM EST
Thanks Dylan.
Other sources seem to agree with your assessment. I guess some self-described "reliable sources" are semi-worthless.
Sorry for the trouble.
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