March 5 Advanced Micro Devices has
dumped its equity stake in GlobalFoundries Inc, three years
after spinning off the company that makes most of its computer
chips, in a move that frees it to strike manufacturing deals
with other foundries.
The chipmaker will continue to outsource chip manufacturing
to GlobalFoundries, but the Abu Dhabi-controlled foundry would
no longer have exclusive manufacturing rights to some of AMDs
AMD had spun off GlobalFoundries to Abu Dhabi
government-owned Advanced Technology Investment Company (ATIC)
in 2009 to cut back on manufacturing costs.
But an unfavourable supply deal and production issues at
GlobalFoundries last year soured the relationship between the
On Sunday, ATIC, owned by Abu Dhabi investment fund
Mubadala, said it bought the 9 percent stake held by Advanced
Micro Devices in GlobalFoundries.
"This (AMD's) stake had been dwindling as GlobalFoundries
Abu Dhabi parents had been making all capital injections while
AMD opted out. This (deal) accelerates the fall to zero of AMD's
position," Longbow analyst JoAnne Feeney said in a note.
As part of the agreement, AMD will make a payment of $425
million to GlobalFoundries to waive off the exclusivity deal,
incurring a related charge of $703 million in the first-quarter.
"The remaining portion of the one-time charge is a
$278 million non-cash expense for AMD's equity ownership
transfer to Global Foundries," the company said on a call with
GlobalFoundries struggled to bring its 28nm chip fabrication
on-line last year, prompting AMD to shift its production to
AMD, a distant second to Intel Corp in selling
microprocessors that are the brains of PCs, had seen production
issues at GlobalFoundries hurt output last year.
The companies also signed a new supply agreement, which
waives certain quarterly payments that AMD was to make to
GlobalFoundries this year as part of the 2012 wafer supply
AMD shares were down nearly 3 percent at $7.27 in morning
trading on the New York Stock Exchange.