AMD Amends Wafer Supply Agreement With GLOBALFOUNDRIES

AMD Amends Wafer Supply Agreement With GLOBALFOUNDRIES 
SUNNYVALE, CA -- (Marketwire) -- 12/06/12 --   AMD (NYSE: 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. 
"Today's announcement demonstrates that the long-term strategic
partnership between AMD and GLOBALFOUNDRIES continues to benefit both
companies," said Rory Read, president and chief executive officer,
AMD. "GLOBALFOUNDRIES' performance in meeting our delivery
requirements in 2012 was strong and they remain a strategic and
important foundry partner moving forward. We are committed to develop
and grow our business with GLOBALFOUNDRIES, increasing our engagement
across our industry leading APU and graphics roadmaps. The newly
amended agreement is another step we are taking to further strengthen
our relationship with GLOBALFOUNDRIES as well as AMD's financial
foundation." 
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.

  
Separately, as AMD moves to standard 28nm process technology, AMD will
reduce future reimbursements to GLOBALFOUNDRIES for certain research
and development costs. 
As a result of the amendment, AMD expects to return to free cash flow
generation in the second half of 2013. 
AMD Teleconference
 AMD will hold a conference call at 2:30 p.m. PT
(5:30 p.m. ET) Thursday, Dec. 6, 2012 to discuss the amendment to its
Wafer Supply Agreement with GLOBALFOUNDRIES. AMD will provide a
real-time audio broadcast of the teleconference on the Investor
Relations page of its website at ir.amd.com. The webcast will be
available for 90 days after the conference call.  
About AMD 
 AMD (NYSE: AMD) is a semiconductor design innovator
leading the next era of vivid digital experiences with its
groundbreaking AMD Accelerated Processing Units (APUs) that power a
wide range of computing devices. AMD's server computing products are
focused on driving industry-leading cloud computing and
virtualization environments. AMD's superior graphics technologies are
found in a variety of solutions ranging from game consoles, PCs to
supercomputers. For more information, visit http://www.amd.com. 
Cautionary Statement
 This release contains forward-looking
statements concerning AMD, its operating model, estimated payments to
GLOBALFOUNDRIES for wafer purchases under the Wafer Supply Agreement,
AMD's ability to negotiate the remainder of its 2014 purchase
commitments from GLOBALFOUNDRIES in 2013; a charge in the fourth
quarter of 2012 and its ability to return to free cash flow
generation in the second half of 2013 which are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are commonly identified by
words such as "would," "may," "expects," "believes," "plans,"
"intends," "projects," and other terms with similar meaning.
Investors are cautioned that the forward-looking statements in this
release are based on current beliefs, assumptions and expectations,
speak only as of the date of this release and involve risks and
uncertainties that could cause actual results to differ materially
from current expectations. Material factors and assumptions that were
applied in making these forward-looking statements include, without
limitation, AMD's current expectations regarding GLOBALFOUNDRIES
manufacturing yields and wafer volumes and demand for its products.
Risks include the possibility that Intel Corporation's pricing,
marketing and rebating programs, product bundling, standard setting,
new product introductions or other activities may negatively impact
the company's plans; the company may be unable to develop, launch and
ramp new products and technologies in the volumes that are required
by the market at mature yields on a timely basis; that the company's
third party foundry suppliers will be unable to transition its
products to advanced manufacturing process technologies in a timely
and effective way or to manufacture the company's products on a
timely basis in sufficient quantities and using competitive
technologies; the company will be unable to obtain sufficient
manufacturing capacity or components to meet demand for its products
or will not fully utilize its commitment with respect to
GLOBALFOUNDRIES microprocessor manufacturing facilities that
customers stop buying the company's products or materially reduce
their operations or demand for the company's products; that the
company may be unable to maintain the level of investment in research
and development that is required to remain competitive; that there
may be unexpected variations in the market growth and demand for its
products and technologies in light of the product mix that the
company may have available at any particular time or a decline in
demand; that the company will require additional funding and may be
unable to raise sufficient capital on favorable terms, or at all;
that global business and economic conditions will not improve or will
worsen; that demand for computers will be lower than currently
expected; and the effect of political or economic instability,
domestically or internationally, on the company's sales or supply
chain. Investors are urged to review in detail the risks and
uncertainties in the company's Securities and Exchange Commission
filings, including but not limited to the quarterly report on Form
10-Q for the quarter ended Sept. 29, 2012. 
AMD, the AMD Arrow logo, and combinations thereof, are trademarks of
Advanced Micro Devices, Inc. Other names are for informational
purposes only and may be trademarks of their respective owners. 
(1) The accounting impact of the termination payment will result in a
one-time charge of approximately $210 million offset by a $45 million
credit in the fourth quarter of 2012. The $45 million credit was owed
for wafer purchases under the 2012 Amendment to the WSA but is no
longer owed under the terms of the third Amendment. Approximately
$110 million of the $320 million termination payment will be
capitalized
 into inventory in the fourth quarter 2012.  
EDITORIAL CONTACT: 
Drew Prairie 
(512) 602-4425 
drew.prairie@amd.com  
INVESTOR CONTACT:
Irmina Blaszczyk
(408) 749-3398
irmina.blaszczyk@amd.com 
 
 
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