Advanced Micro Devices AMD.N said it was selling its equity stake in foundry partner GlobalFoundries Inc, in a deal that will no longer require the company to make its chips exclusively at Global Foundries.
The chipmaker 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 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 agreement.
AMD, a distant second to Intel Corp (INTC.O) in selling microprocessors that are the brains of PCs, had seen production issues at GlobalFoundries affect output last year.
AMD had spun off its semiconductor manufacturing arm into GlobalFoundries in 2009 with investment from Abu Dhabi-backed ATIC.
(Reporting by Himank Sharma in Bangalore)