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AMD
today
announced that it successfully amended its Wafer Supply Agreement
(WSA) with GLOBALFOUNDRIES Inc.
The closure of amendment negotiations solidifies AMD's new operating
model as communicated at the third quarter 2012 earnings
announcement.
To better align with today's PC market dynamics, AMD and
GLOBALFOUNDRIES agreed on purchase commitments for fourth quarter
2012 and established fixed pricing and other terms of the WSA which
apply to products AMD will purchase from GLOBALFOUNDRIES through Dec.
31, 2013.
Announcement details:
-- AMD lowered its wafer purchase commitments for the fourth quarter
2012.
-- AMD currently estimates that it will purchase wafers from
GLOBALFOUNDRIES for approximately $115 million in the fourth quarter 2012 and $1.15 billion in fiscal 2013. AMD has also
committed to purchase wafers from GLOBALFOUNDRIES for
approximately $250 million during first quarter 2014.
-- AMD expects to negotiate the remainder of its 2014 purchase
commitments from GLOBALFOUNDRIES in 2013.
-- AMD will make a termination payment of $320 million related to the
take-or-pay agreement with GLOBALFOUNDRIES associated with the
adjusted wafer purchase commitments in fourth quarter 2012.
-- The cash impact of the termination fee will spread over several
quarters:
-- $80 million by Dec. 28, 2012;
-- $40 million by Apr. 1, 2013; and
-- A $200 million prom
issory note issued by AMD to
GLOBALFOUNDRIES due on Dec. 31, 2013.
-- The termination fee will result in a net one-time charge of
approximately $165 million(1) recorded in the fourth quarter 2012.
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