AMD talked about the deal it renegotiated with GlobalFoundries today. Thomas Seifert, CFO and stand-in CEO, said that before the renegotiation, AMD paid GloFo for wafers on a cost plus basis – that includes fixed costs on fabs regardless of whether the capacity was used by AMD.
He said that he wants to make sure that 32 nanometre supply was sound. Llano is now shipping for revenues, he said. The GPU and chipset terms will continue. In early January next year, AMD will return to its former wafer pricing.
He said there were several reasons for AMD to amend the terms. It needed GloFo to stay focused on 32 nanometres. AMD wanted better protection if yields were low.
AMD has changed its pricing and modified its commitment for graphics chips and chipsets. AMD will buy a fixed number of 45 and 32 nanometre wafers in 2011. It will only pay GloFo for “good die”. The amendment means gross margin guidance will stay unchanged – between 44 percent and 48 percent. Gross margins will be over 50 percent in the future, Siefert indicated.
Siefert said that the new agreement “provides the right incentive for GlobalFoundries to work towards our mutual success”. Pictured, right, is GloFo’s Fishkill fab – pretty close to IBM Microelectronics, in a way.
GlobalFoundries will be given more graphics and chipset business, Siefert indicated. Yields on 32 nanometre are on target, said Siefert. AMD has “two very committed partners” in GloFo and TSMC. AMD will continue to work with TSMC. He said that AMD had started to renegotiate with GloFo last year, and yields are on target, he said.
Rumours are circulating that AMD will appoint a new CEO soon. Siefert declined to comment on progress on the appointment.