SUNNYVALE (dpa-AFX) - Advanced Micro Devices, Inc. (AMD) late Sunday said it agreed to a negotiated wafer price mechanism with semiconductor foundry Globalfoundries Inc. for 2012 and also agreed to transfer its remaining ownership interest in that company to the firm itself. AMD will record a charge in the first quarter related to a payment to Globalfoundries.
Further, Globalfoundries waived the exclusivity arrangement for AMD to manufacture some 28nm APU products for a specified period. As a result, AMD has agreed to pay Globalfoundries $425 million, of which $150 million will be paid on March 5. Of the remaining, $50 million will be paid by July 2, $50 million by October 2 and $175 million in the first quarter of 2013.
AMD expects to record a one-time charge of $703 million in the first quarter consisting of the $425 million cash payment and the remainder will be a non-cash charge.
AMD's first-quarter non-GAAP gross margin guidance of about 45 percent and the 2012 non-GAAP gross margin guidance of 44 percent - 48 percent remain unchanged.
In an amended Wafer Supply Agreement with GLOBALFOUNDRIES, the two firms set up a wafer price mechanism with negotiated prices based on a take or pay arrangement in 2012. A framework for wafer pricing in 2013 also has been established. The two firms also agreed that AMD's additional 2012 quarterly payment obligations specified in the 2011 amendment would be waived.
As AMD has agreed to transfer its remaining ownership interest in GLOBALFOUNDRIES, it will no longer hold an equity stake in that firm.
Rory Read, CEO of AMD, said, 'The amended wafer supply agreement demonstrates that AMD and GLOBALFOUNDRIES remain committed as long-term strategic business partners. 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 closed on Friday at $7.46, down $0.05 from the previous close, on 11.2 million shares.
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© 2012 AFX News
