AMD Offloads Last Stake In Globalfoundries

AMD has sold the last of its stake in chip fabrication company Globalfoundries, its former manufacturing unit

Advanced Micro Devices continues to under strategic changes after it shed the last of the stake it held in Globalfoundries.

Globalfoundries is of course the chip fabrication company that was created when AMD spun off its manufacturing business in 2009.

The move, announced 4 March, means that while AMD will continue to contract with Globalfoundries for manufacturing some of its chips, it can now more fully engage other foundries, such as Taiwan Semiconductor Manufacturing Co. (TSMC).

Manufacturing Deal

After spinning off the manufacturing business in 2009, AMD had contracted with Globalfoundries as its exclusive chip manufacturer. AMD has engaged other chip makers in recent years.

Globalfoundries officials said the company is now fully independent and fully owned by Advanced Technology Investment Co., which is owned by the government of Abu Dhabi.

The change comes through an amended wafer supply agreement between the two companies. Under the amended agreement, AMD will shed its remaining 9 percent stake in Globalfoundires and pay $425 million (£270m) in cash over the next two years. AMD expects to take charges of $703 million (£447m) in the first quarter ending its stake in Globalfoundries.

In addition, Globalfoundries agreed to waive $430 million (£273m) that AMD was set to pay under the old wafer supply agreement. The two companies also have set the price for wafers for 2012 and have created a framework for pricing next year.

Globalfoundries also will no longer be the exclusive maker of AMD’s upcoming 28-nanometer chips. Instead, Globalfoundries will make some of the chips, with other foundries manufacturing the others.

Fully Independent

“The amended wafer supply agreement demonstrates that AMD and Globalfoundries remain committed as long-term strategic business partners,” AMD CEO Rory Read said in a statement. “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.”

AMD executives in the third quarter of 2011 were forced to cut their financial forecasts after problems at Globalfoundries’ fab in Dresden, Germany, limited the supplies of AMD’s 32nm “Llano” processors and other 45nm chips. AMD leaned hard on Globalfoundries to fix the issues, and executives have said over recent months that they have been pleased with the improvements at the fab.

Globalfoundries executives applauded the new agreement with AMD, saying it adds to the momentum the foundry has built up in recent months. The company in January announced plans to spend more than $3 billion (£1.9bn) this year to expand its facilities in Singapore, New York and Germany. In addition, Globalfoundries also noted that its new 300mm fab in New York began operations to develop new chips for IBM, and that it is continuing to grow its partnership with ARM Holdings.

“Today marks the start of a new era for Globalfoundries as it becomes a truly independent foundry,” CEO Ajit Manocha said in a statement. “Globalfoundries has a clear vision to be the leading semiconductor foundry partner to AMD and one of the world’s top technology companies.”

AMD Restructuring

AMD’s Read has aggressively reshaped the company since becoming CEO last year.

In the latest move, AMD announced on 29 February plans to buy microserver maker SeaMicro for $334 million (£212m). The move not only enables AMD to become a larger player in the burgeoning market for high-performance, low-power servers for the Web and cloud markets, but also dealt a blow to larger rival Intel.

SeaMicro built its business using Intel’s Atom chips to power their highly efficient systems, and in January announced its new SM10000-XE server, which runs on Intel’s Xeon X3-1260L processors. AMD is expected to quickly begin transitioning the SeaMicro servers to its own chip technologies.

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