AMD takes a $335m one-time charge for more sourcing flexibility

AMD is altering the wafer supply agreement it's maintained with GlobalFoundries for some time now. In a rather cryptic press release issued this evening, the company says the new agreement "further strengthens our strategic manufacturing relationship with GLOBALFOUNDRIES while providing AMD with increased flexibility to build our high-performance product roadmap with additional foundries in the 14nm and 7nm technology nodes."

As AMD tells it, the new agreement does the following things:

  • Covers a 5-year period, spanning from calendar year 2016 through 2020;
  • Establishes a comprehensive framework for technology collaboration between AMD and GF for the 7nm technology node, building on the success of the 14nm node;
  • Provides AMD with the flexibility to manufacture certain products with another wafer foundry;
  • Sets annual wafer purchase targets from 2016 through the end of 2020, fixed wafer prices for 2016, and a framework for yearly wafer pricing.

In exchange for the new agreement, AMD is giving GlobalFoundries the following consideration:

  • Make a $100 million cash payment to GF, paid in installments beginning in Q4 2016 through Q3 2017.
  • Make quarterly payments to GF beginning in 2017 based on the volume of certain wafers purchased from another wafer foundry.
  • Grant to West Coast Hitech L.P., a wholly-owned subsidiary of the Mubadala Development Company PJSC, a warrant to purchase 75 million shares of AMD common stock at a purchase price of $5.98 per share. The warrant may be exercised in whole or in part prior to February 29, 2020. The warrant is only exercisable to the extent that Mubadala or its subsidiaries do not beneficially own, either directly or indirectly, an aggregate of more than 19.99 percent of AMD's outstanding capital stock after the exercise.

The thrust of this new agreement seems twofold to us. AMD seems to be expecting to purchase wafers from another company, either to the detriment of GlobalFoundries or at least without expanding its demand of chips from GloFo. It's willing to pay for that apparent flexibility in sourcing to the tune of $100 million in cash and the option to sell as much as another 2.2% of itself to the Advanced Technology Investment Company (ATIC), which is owned by Mubdala Development Company. ATIC in turn is the owner of GlobalFoundries. In total, AMD will record a one-time charge of $335 million for the privilege of altering its supply agreement with GloFo, not accounting for the payments it'll make to the company if it starts sourcing 14-nm wafers from another foundry.

The natural question that arises from this agreement is who AMD's alternate source for wafers might be. Aside from GloFo, the only major providers of 14-nm products are Samsung and Intel, to our knowledge, and only Samsung is offering services for the same 14-nm Low Power Plus FinFET technology that AMD is already using in its Polaris graphics cards and its upcoming Zen CPUs.

Intel certainly offers 14-nm products through its Custom Foundry service, but it seems highly unlikely that AMD is seeking to pad the pockets of its competitor through that service. AMD doesn't specifically note that it's trying to source 14-nm wafers only, however, so it might also be looking to establish a partnership with TSMC to use that foundry's 16-nm FinFET process. That technology has already been deployed to great effect in Nvidia's Pascal cards. We suppose we'll just have to wait for official word from AMD for more info about its sourcing strategy.

Comments closed
    • beck2448
    • 3 years ago

    That’s gotta hurt.

    • ptsant
    • 3 years ago

    There is an interesting analysis on WCCftech (http://wccftech.com/analysis-amd-multi-year-amendment-2016-wafer-supply-agreement/). The warrant thing indirectly suggests that the [b<]insiders[/b<] from GloFo and AMD see some potential profit from buying at that price ($6). In fact, based on some calculations that I do not fully understand, the author calculates that AMD probably expects a time-weighted average share price at $9.19, which is quite higher than the actual price. All this is purely speculative, of course, but if the stock were significantly overvalued I know I would have asked for a warrant (option) at $3, not $6. In fact, if AMD were in a very bad situation with Zen I would not have taken shares at all .

    • Bensam123
    • 3 years ago

    Hah, AMD does some really weird stuff sometimes for the sake of bettering their company, I wouldn’t put aside the notion of them partnering with Intel. Long term it might not be a great solution, but for right now it doesn’t sound like that bad of a idea. Not like AMD can put Intel out of business… Intel doesn’t seem too concerned with furthering performance at the moment either.

    • ronch
    • 3 years ago

    This WSA between AMD and MoFo and how IBM actually PAID someone else to TAKE their fabs a few years ago are solid examples of how NOT to deal or do business in the world of chip foundries.

    • BaronMatrix
    • 3 years ago

    I was dreading reading this… How much does it cost to RUN a fab…? A lot MORE than they pay to get wafers… DOOM AND GLOOM…

    • Laykun
    • 3 years ago

    Jesus, AMD has turned into that pathetic boyfriend, who’s girlfriend just keeps screwing him around, taking money from his wallet and disrespecting him at the same time. They’ve been together so long that she’d take half of everything if he tries to break up with her.

    • Chrispy_
    • 3 years ago

    The one-time charges are as regular as rent payments when it comes to AMD and GloFo.

    /facepalm.

    • rxc6
    • 3 years ago

    [url=https://www.youtube.com/watch?v=WpE_xMRiCLE<]This deal's getting worse all the time![/url<]

      • chuckula
      • 3 years ago

      Sorry, JAE beat you.

        • rxc6
        • 3 years ago

        Yeah, I saw it later 🙁

    • Mat3
    • 3 years ago

    Is AMD management really this stupid? This isn’t the first time they’ve had to pay an arm and a leg to change a deal they made with Global Foundries. Sounds just like the last time: pay Glofo a boatload of cash (that they really can’t afford) to do some of their business at another foundry, presumably because Glofo wasn’t up to snuff.

    For Glofo it’s fantastic; not only do they get the cash, but now they open up manufacturing space for other deals with someone else. I never hear about these problems with TSMC. AMD needs to just get away from Glofo and stop making deals like this; treat them like a true 3rd party because that’s what they are now.

    Edit: After reading a link provided by someone else, it seems this all stems from one really bad 15 year deal made with Glofo in 2009 that AMD has to continually adjust annually. Wow, AMD management back then (Dirk Meyers is one name I can remember) were the biggest fools out there. Let’s not forget those same morons were also in charge when BD was being developed. All those losers are no doubt gone now, but for helping to destroy the company I’m certain they got lovely severance packages.

      • blastdoor
      • 3 years ago

      In assessing whether AMD made a bad deal with Glo Fo, the key question is “compared to what?” What other deal could AMD have made (in the real world) that is better than the one they made?

      AMD’s big mistake wasn’t the deal with Glo Fo. AMD’s big mistake was buying ATI for $5 billion. And to some of us that was obvious at the time, not just in hindsight.

        • Mat3
        • 3 years ago

        Well they shed themselves of having any control of their former foundry but little in the way of the flexibility of not owning a foundry. None of us have the details but given the annual charges and huge payments, this deal is so rotten there should have been some serious reservations about it at the time.

        And the ATI purchase price wasn’t their the only blunder. With Core 2, Intel was killing them in performance (Phenom II was sorta in the same ballpark, but starting with Nehalem it was game over) because they thought they could go on the cheap and get away with small weak cores. From the original Athlon 64 to the final version in Llano, there were hardly any meaningful improvements. Each iteration would see something like buffers and registers slightly increased, a wider FP unit, more instructions.. but the performance per clock mostly stagnated.

        And what was their answer? That turd Bulldozer which was just more of the same: good multi thread performance (integer anyways), bad – actually even worse – single thread performance! No hindsight needed to know that wide SMT cores were the way to go. Bulldozer was a questionable concept coupled with bad execution. It takes hundreds of millions and years to design a new CPU, and what did it get them? To say the 8150 was a step sideways to the 1100T is being generous. If they couldn’t do it right, they should have just continued the Phenom II line into 32nm.

    • just brew it!
    • 3 years ago

    Translation: “We just paid GloFo a sh*t-ton of money to let us date other people. We’re not quite ready to file for divorce yet, but we’re sleeping in separate beds.”

    • Mikael33
    • 3 years ago

    What’s the deal with AMD and one time charges?

      • K-L-Waster
      • 3 years ago

      Their management doesn’t like to repeat itself, so they put in the effort to make sure every screw up is different?

    • Leader952
    • 3 years ago

    AMD Has A Foundry Albatross Around Its Neck

    [url<]http://seekingalpha.com/article/4003538-amd-foundry-albatross-around-neck?li_source=LI&li_medium=liftigniter-widget[/url<] [quote<]AMD just accepted ~9.1% dilution plus had to make a further $100 million cash payment to appease the foundry albatross.[/quote<]

    • chuckula
    • 3 years ago

    Here’s a quick trip down memory lane to the genesis of the current situation: [url<]https://techreport.com/review/13792/amd-2007-analyst-day-platforms-and-the-glass-half-full[/url<] Remember when "asset light" was the buzzword that AMD claimed gave it a big advantage over those klunky old timers with their fabs?

    • DPete27
    • 3 years ago

    Classic. Sign a long-term agreement with the cheapest fab you can find and it miraculously turns out to be an anchor tied to your foot.

    The cheapest guys are cheap for a reason. Common sense AMD.

      • chµck
      • 3 years ago

      Wasn’t GF a part of AMD once?

        • chuckula
        • 3 years ago

        STOP MAKING ME FEEL OLD.

        • DPete27
        • 3 years ago

        What’s your point?

          • jihadjoe
          • 3 years ago

          I’m guessing it’s that AMD didn’t just sign that agreement with GF just because GF was cheap, but because it was part of the deal that let them spin off their fabs in the first place.

          Who would be willing to purchase a fab that doesn’t have any existing customers? If AMD to complete that fabs for cash deal they had to guarantee the new fab owners a customer until they were able to recoup part of their investment, which is how Wafer Supply came about.

      • ronch
      • 3 years ago

      No, no, no. This is all part of that stoopid Wafer Supply Agreement® AMD’s past CEO signed with those Arabs back in 2008 when they so badly wanted to ditch their fabs and go Asset Light™.

      Betcha Hector is sipping lemonade and basking in the artificial sun in his money bin full of golden parachute money right about now.

    • ronch
    • 3 years ago

    I think there’s something like 5,482,864,405 ‘one time charge’ conditions in the contract AMD inked with MoFo.

    • Travis32
    • 3 years ago

    I wonder if AMD has newfound increased demand for their graphics cards. Here’s a layman’s link that explains what Global Foundries does. [url<]http://www.techradar.com/news/computing-components/graphics-cards/how-gpus-are-made-1000923/2[/url<]

    • ptsant
    • 3 years ago

    I believe that the obligation to buy from GloFo (ie the reason why they are negotiating all the time and making these agreements) ends around 2020.

      • tipoo
      • 3 years ago

      2024…AMD really couldn’t afford 8 years of being on an inferior fab.

        • ronch
        • 3 years ago

        If Zen blows there won’t be an AMD in 2024.

        But there will still be these one time charges.

    • ronch
    • 3 years ago

    GloFo should be renamed ‘MoFo’.

      • tipoo
      • 3 years ago

      Mo’ Slo

      • w76
      • 3 years ago

      GoSlo?

      • Zorb
      • 3 years ago

      How ’bout ‘GoBlow’?

    • ronch
    • 3 years ago

    The management team in place before Rory really bungled things up for AMD. Bad CPU design decisions, bad agreement with ATIC. These one-time charges are never ending. Go suck an egg, ATIC.

    As for AMD using Intel’s fabs, I’d go for it if it means making Zen better and more efficient. Business is business.

    • flip-mode
    • 3 years ago

    [quote<]but it seems highly unlikely that AMD is seeking to pad the pockets of its competitor through that service[/quote<] If I were AMD that would be the last thing I would worry about. AMD should not care if what is good for AMD also happens to be good for Intel, they should care about getting the highest quality fabrication they can get.

    • Tristan
    • 3 years ago

    They change rules already next year, as usual.

    GF is low-quantity on latest processes, so AMD is admitting that Polaris and Zen failed to significantly increase market shares.

      • flip-mode
      • 3 years ago

      [quote<]AMD is admitting that Polaris and Zen failed to significantly increase market shares[/quote<] Sigh. If by "ADM is admitting that" you mean "AMD is subject to my speculation that". What it *probably* means is that GloFo could not supply enough volume.

      • ronch
      • 3 years ago

      So even before Zen is released AMD is admitting it has failed to increase market share??

      Good grief. It’s that bad, huh?

      • TheRazorsEdge
      • 3 years ago

      Either that, or maybe GoFlo’s volume can barely support Polaris sales. Or maybe their process cannot hit the power and frequency targets for Zen/Vega.

      And they certainly don’t want problems when Zen and Vega launch.

      Intel has the performance crown firmly in hand, so they can respond readily with pricing and probably a new product when Zen launches.

      To capitalize on their investment, AMD will need to sell Zen hard—charge as much as possible, deliver as quickly as possible.

      If GoFlo doesn’t have the capacity to build up a Zen inventory and feed the market, AMD needs another option—even if GoFlo’s process meets the performance requirements.

    • sollord
    • 3 years ago

    I wouldn’t totally disregard Intel it’s highly improbable but not impossible that Intel just might be willing to let AMD use it’s 14nm once they transition to 10nm and nothing say this contract tweak is for Zen or X86 products for all we know Zen works great on GloFo 14nm process but said process has sorta shown to be less then optimal for GPUs compared to the 16nm process from TSMC.

    While a super long shot I can’t see Intel being overly worried if AMD wanted to contract them to make GPUs and maybe even ARM processors on there 14nm line as long as they get paid and it keeps AMDs x86 bussines in alive. Intel still has to be concerned about AMD folding and getting dragged into a Monopoly lawsuit over x86 as it basically owns the desktop and server markets platform wise. ARMs just not all the way there yet but its close

      • w76
      • 3 years ago

      I was going to post the same thing. Business isn’t always personal. Look at how auto manufacturers build cars and share platforms with arch rivals. It’s constant.

      I help manage a manufacturing division of a company myself, and just two weeks ago inked a white-label production agreement with a smaller local rival to help give our production staff a break. Much how Intel may look at AMD, I see very little threat in partnering with a smaller rival to mutual benefit.

      Now, if AMD knocks it out of the park with Zen and grows to become a true rival again, the calculus might change. That’s also not a prediction AMD would go with Intel, just saying I think all else being equal it’s no more or less likely than anyone else.

        • ronch
        • 3 years ago

        The old veterans working for both companies who really hated each other during the earlier days of the x86 clone wars are probably few and far between. There’s surely a lot of new blood in both of them these days who couldn’t care less about past differences.

          • Beahmont
          • 3 years ago

          That doesn’t take into account the fact that there almost assuredly are all new people at Intel who hate AMD, and more particularly AMD FanBoi’s. I mean lot’s of us here are beyond fed up with AMD’s dumb decisions and marketing practices. Imagine how it must feel to have a large amount of the tech industry and enthusiast consumer base constantly telling you how evil you are just for working at Intel, how sorry you’ll be when [s<]Bulldozer[/s<] err... [s<]Pile-driver[/s<] err... [s<]Steamroller[/s<] err... Zen gets here, and how your prices are always out of control because I can't spend $320 dollars today for your top of the line consumer processor like I did 5 years ago! (Never mind that with 5 years of inflation, just to make the same amount of money on the same bill of materials it will cost intel more or less an additional 10% to make the same thing. Which low and behold happens to be about the amount that prices went up! Jee, it's like there's a market or something that determines costs. )

            • Waco
            • 3 years ago

            I don’t know anyone at Intel (which is a reasonable sample size) that cares one bit about what random idiots say about them working at Intel versus AMD.

      • blastdoor
      • 3 years ago

      I could definitely see GPU.

      No way x86.

      ARM — depends on the market. No way if it’s server.

      • BurntMyBacon
      • 3 years ago

      I can’t really get on board with the GPU side. To clarify, I don’t see a business issue with AMD fabricating GPUs at Intel. However, up until Polaris, AMD has been using TSMC for their GPUs. Clearly, GPU fabrication was not part of the original arrangement so unless somebody thought it was a good idea to change the agreement to lock in the use of a fabrication facility that they had never used for GPUs before, GloFlo has no say over where AMD’s GPUs are fabricated.

      I’m not really sure whether ARM chips were part of the original arrangement either, but my best guess is that they weren’t based on the fact that AMD didn’t really have much in the way of ARM business back in 2009 so it unlikely to have entered the original agreement either. I could see AMD using ARM chips to meet fabrication quotas, but locking them only to GloFlow seems illogical, though perhaps more likely than the GPU. I’m not sure GloFlo has any say over where AMD decides to fabricate ARM chips either.

      To me, it seems the changes in the agreement were targeted at x86 CPU production. This suggests that either GloFlo’s process is incapable of meeting expectations to the point that AMD would rather incur significant extra cost per chip to fab it somewhere else (I find this unlikely), or AMD’s projected demand (could be optimistic) is larger than GloFlo is capable of providing. If the first situation is true, then TSMC is the likely choice. I suspect Intel and AMD would be willing to work together here (despite competing interests), but unless there is a special deal, Intel’s fabs are for more expensive than AMD can afford. If the second situation is true, then Samsung is the obvious choice as AMD would have little to no design changes to use the theoretically identical process.

      • tipoo
      • 3 years ago

      Man I hope so. Glofos/TSMCs/Samsungs 14/16nm are just what Intel would call 20nm with finfetts, they caught up in marketing alone, they’re still a fab behind. Even going with Intels 14 while they went to 10 would be significant.

      • anubis44
      • 3 years ago

      I agree that it’s possible. After all, Samsung still fabs ARM chips for Apple, their chief rival. However, I think it’s somewhat improbable, since Samsung is the supplier of Global Foundaries’ current 14nm process. It seems much more likely that AMD will get Samsung, Global Foundaries and Taiwan Semiconductor Manufacturing to all produce chips for them, as AMD’s chip volumes dictate.

    • basket687
    • 3 years ago

    So the second generation Zen processor will NOT be fabricated a GlobalFoundries?

      • ronch
      • 3 years ago

      With the way GF is being a First Class Jerk, I think I’ll just wait for Zen to be fabbed elsewhere before I buy.

        • Concupiscence
        • 3 years ago

        Zen’s being fabbed at TSMC, do not fear.

    • Hattig
    • 3 years ago

    GF are not making a 10nm process node.

    TSMC and Samsung are, and they are looking reasonably worthwhile, albeit expensive.

    Nvidia will clearly have a 10nm GPU line by early 2018, if not earlier.

    AMD simply cannot afford to be competing in 2018 and 2019 with Nvidia if Nvidia have a 10nm product line (with the corresponding power savings and density advantage) and AMD have a 14nm process only (albeit with Navi which may be a multi-small-die interposer solution).

    So I am guessing that they are doing this in order to offer a 10nm product line on (most likely) Samsung’s fabs from next year (“beginning in 2017”).

    • dragosmp
    • 3 years ago

    Samsung will also offer 10nm, while GloFo won’t. AMD is right to hedge on GloFo hitting/missing its 7nm EUV targets.

    It does seem Glofo’s licensed 14nm came late and not with as good yields as in Samsung’s plants. If Glofo can’t execute on an externally developed process, it casts doubt on their internal capability of designing a process and implementing it even though if they’re clean in their development, implementing an internal process (7nm EUV) may be easier than a purchased one.

      • HisDivineOrder
      • 3 years ago

      Seriously, you’re still talking about doubt?

      GloFo can’t execute. I thought this was a given by now.

    • HisDivineOrder
    • 3 years ago

    When AMD sold its soul to GloFo, they made a decision that sank their company. This appears at least to be an acknowledgement of that mistake. I think that’s good that they now recognize publicly what is holding them back (at least in part), but I don’t think that spending even more money to drive a wedge between them and their primary fab is going to turn out well.

    Now they’re like the guy who tells his wife, “Yeah, I want to see other women, but hey… uh, could you keep cooking me dinner every night and servicing my needs when I don’t have any dates? That’d be swell.”

    • NTMBK
    • 3 years ago

    Urghhh. This deal just keeps sucking the life out of AMD. How long until it’s over?

      • HisDivineOrder
      • 3 years ago

      Turn away, son. Turn away. AMD’s almost dead. Here, I’ll comfort them…

      Shhhh, AMD. Shhhhhh… just let go. Just let go and release ATI back into the wild and go to that great CPU design company in the sky where every release is great and there aren’t any bugs that cripple performance and promises made are actually met.

        • NTMBK
        • 3 years ago

        I meant how long until the deal is over, not until AMD is over 😛

          • HisDivineOrder
          • 3 years ago

          I get that, but, uh, dude. I think the deal will be over when AMD dies. 😉

          That’s what happens when you sell your soul.

            • NTMBK
            • 3 years ago

            Good point. You hold AMD down, I’ll go get the pillow.

        • ronch
        • 3 years ago

        Cyrix is there and makes perfect CPUs.

        • davidbowser
        • 3 years ago

        You get my thumbs up for comedic execution, but I REALLY hope that AMD does not stop making CPUs. Intel without any competition is a scary thing (that we already went through) and I am not eager to see it (again).

          • DPete27
          • 3 years ago

          You really think Intel is getting competition from AMD [i<]NOW[/i<]? That's amusing.

            • Waco
            • 3 years ago

            There’s no way Intel would avoid monopoly charges if AMD died. They’ll get an injection from somewhere, assuming there’s no other contender in the next few years.

          • Kretschmer
          • 3 years ago

          Intel has been competing with itself forever (AMD’s peak market share was what…15%?) and CPUs are quite affordable.

            • davidbowser
            • 3 years ago

            Affordable is relative, but I get your point. Intel operates in the processor market as a “premium” brand, and as such, does not lower prices until they clear inventory for their replacement model. They don’t have to lower prices because there are no competing alternatives.

            Here is a little reading for the basis of my comment:

            [url<]https://techreport.com/review/23663/as-amd-struggles-intel-chip-prices-stagnate[/url<]

        • anubis44
        • 3 years ago

        AMD’s nowhere near dead. On the contrary. They’ve meticulously built themselves into a fabless CPU/GPU design house, and they’re about to make serious inroads against both Intel and nVidia over the next couple of years. They are the only OTHER x86 licensee with new CPU tech that’ll grab serious market share from Intel over the next couple of years, and they’re also the only OTHER world-class GPU maker, with over 75% of the gaming GPU market (consoles+PC), and that market share is only going to increase to >90% in the next two years, as the next generation consoles are also going to be AMD-powered, and AMD’s current CEO is showing how aggressive AMD is going to be in taking back market share in the GPU market. AMD’s release of a mid-range GPU, and totally ignoring the high end is proof of this. The high end is barely worth a few percent market share, but the mid-range, where the RX480/RX470 are competing is where the lion’s share of the market and GPU profits are.

    • kuttan
    • 3 years ago

    [quote<] Make quarterly payments to GF beginning in 2017 based on the volume of certain wafers purchased from another wafer foundry. [/quote<] AMD needs to pay GF for purchasing wafer from another foundry ? What logic in that statement ?

      • maxxcool
      • 3 years ago

      Contracts… all that fine tiny print.

      • chuckula
      • 3 years ago

      Speaking broadly GloFo was going to get 100% of AMD’s business under contract.

      Let’s assume that hypothetically they are now getting only 75% of AMD’s business under contract with the other 25% going to Foundry X. As compensation, GloFo gets straight cash for the lost 25%.

      It’s not 100% of what GloFo would have gotten for the lost business from AMD.. but it also means that GloFo’s fab capacity that would have been dedicated to that lost 25% is now available for some other customer (if there is one).

        • ronch
        • 3 years ago

        So AMD pays that 25% and gets nothing. They might as well pay that 25% and take delivery for actual chips they can sell, then use another foundry to put out 25% the capacity they buy from GF and say, “Well, we ARE getting 100% of our chips from you guys, but we are running at 125% capacity and we get the +25% from TSMC.”

        Edit – /s

          • chuckula
          • 3 years ago

          AMD is paying a premium for the privilege of [b<]not[/b<] having to rely on GloFo's fabs to make its chips. AMD's management thinks that it's actually better for AMD to pay GloFo a premium on top of the normal price of fabbing these chips with some other company because AMD will still make more money than trying to get GloFo to just make the chips. It's kind of an indictment of GloFo if nothing else.

            • ronch
            • 3 years ago

            Yes I did get what they’re doing. It’s like paying 33% more per chip then compensate with higher binned chips that fetch higher selling prices from elsewhere. Not too shabby. Still, it really goes to show how bad GF is, and how the deal Hector struck with them is even worse.

      • HisDivineOrder
      • 3 years ago

      Well, let’s think about this a little bit. GloFo is at least partly what’s left of AMD’s own fabs from way back. One of the reasons AMD accepted an agreement to get only a billion from Intel in exchange for dropping all support of an argument of Intel having been a monopoly was to convince Intel to grease the wheels and stop THEIR counter argument that AMD couldn’t spin off its fab. (Long ago, Intel and AMD had an agreement that said that AMD could have an x86 license so long as it didn’t have any third parties fabricating its CPU’s. As soon as AMD wanted out of the fab game, Intel basically threatened to strip their right to make CPU’s.)

      So AMD got a pittance of the profits Intel earned from its monopolistic practices way back in the day that secured its ownership of the PC industry and the option to spin off their fabs for a pittance to then have the company that emerged from that “deal” then put AMD’s balls in a vice.

      All to buy ATI, which sank the GPU company’s own value because it divided limited resources to now have to compete with Intel AND nVidia.

      AMD went into poverty to buy ATI to no effect, freed Intel from any kind of penalty that might have given them a chance of catching up, and created the very devil that is ringing them dry of money with increasingly poor product that doesn’t match up to what the rest of the industry is doing. And because of the terms of the deal, AMD has no recourse except to spend even more money to go elsewhere.

      AMD basically shot itself in the foot, looked down, shot itself in the stomach, and wincing, decided to shoot itself in the face.

        • tipoo
        • 3 years ago

        AMD really is the motherload of lack of foresight and bad decisions, aren’t they. It’s like cheering on your local sportsball team but they keep making baffling decisions. Or at least, I imagine, if I followed sportsball (can you tell by how I call it sportsball?)

          • ronch
          • 3 years ago

          I think it’s ball sports.

      • tipoo
      • 3 years ago

      Here’s the double whammy, they also paid to get INTO the WSA…Now they have to pay their way out of Glofos crap process, after Glofo convinced them they just needed to get some things in order and the next process would be better.

        • chuckula
        • 3 years ago

        [quote<]after Glofo convinced them they just needed to get some things in order and the next process would be better.[/quote<] [url<]http://cdn.meme.am/instances/28534833.jpg[/url<]

          • Beahmont
          • 3 years ago

          *sniff* Thanks for reminding me that such a great man has died Chuckula. Now I’m all sad again.

    • Leader952
    • 3 years ago

    AMD and their one-time-charges. Seems like they have them every quarter.

    Today it is another $335 million.

    Then there is this: option to sell as much as another 2.2% of itself

    Stock delusion is never good for investors.

      • anubis44
      • 3 years ago

      AMD would not be doing this unless it was beneficial for them. They must be expecting to make back more than the $335 million they just spent significantly more quickly. This is not bad for AMD, it’s almost certainly a positive. Looks like the market doesn’t get this, and is creating another buying opportunity for those who want to pick up more AMD shares.

        • OneShotOneKill
        • 3 years ago

        Confirmation bias. Good luck.

        • chuckula
        • 3 years ago

        1. AMD diluted its shares with this deal, that’s not good for shareholders. Additionally, there’s no evidence that this Mubadalla group — which is the owner of GloFo — necessarily has AMD’s best interests at heart as a going concern.

        2. AMD used to not put all of its eggs in one basket. Then it decided to ditch TSMC for GPUs and the AMD fanbase took this to mean OMG GloFo 14nm is some miracle.

        Now, less than 2 months after Polaris finally makes it onto the market we see AMD turning around and dropping $335 million that they really don’t have just to distance itself from GloFo… you know, the same fab that it had just doubled-down on to its own detriment in the very recent past.

        You need to distinguish damage control from brilliant strategizing since they aren’t the same thing.

        • Redocbew
        • 3 years ago

        AMD is choosing whether it gets kicked in the teeth or in the stomach. One might be better than the other, but that doesn’t make either of them good.

        • MathMan
        • 3 years ago

        You’re confusing ‘good’ with ‘not as bad as the alternative’.

    • OneShotOneKill
    • 3 years ago

    Ah… The poor getting poorer. AMD is hell bent on staying in financial trouble.

      • HisDivineOrder
      • 3 years ago

      Thing is, I don’t see how they undo the primary mistake of getting in bed with GloFo in the first place. They’re in a binding agreement with the screwup of the fab world. They can’t make anything without screwing up in a major way, usually both in terms of how much power it uses AND in how much performance it provides. Leakier product than the Titanic pinballing off a long series of icebergs.

      You’re in a binding contract for years to use a company that can’t release chips that don’t suck and, no matter how great or poorly you design your chip, it will always be worse than it could be at other fabs because of how poor GloFo is?

      Do you keep losing money and credibility by continuing to use that company or do you pay to at least get a few products produced elsewhere and try to win some hearts and minds? Of course, then you’re basically screaming to the world that GloFo sucks and they know you’re doing it, so they charge you an arm and a leg to reveal your lack of confidence in their abilities and they suddenly aren’t as invested as they were…

      …which imagine how bad it’ll get now if they were invested before? Imagine GloFo LACK of investment if what has come before was them being fully committed to AMD?

    • Fursdon
    • 3 years ago

    [url<]http://www.pcper.com/news/Processors/GlobalFoundries-Will-Skip-10nm-and-Jump-Developing-7nm-Process-Technology-House[/url<] Odds that 2020 become 2021 or 2022?This after being stuck on the 32nm/28nm node for quite a while.

      • guardianl
      • 3 years ago

      GF bought IBM’s semi division effectively (most importantly, the bulk of the scientists and engineers). The IBM folks are slowly taking over in Malta. They were under capitalized during the IBM ownership and still delivered a good node with 22 nm SOI. They’ll deliver on 7 nm, but since they’ve just been around a year, they can’t make a 10 nm process appear out of thin air.

        • NTMBK
        • 3 years ago

        GF didn’t buy IBM’s semi business, they were paid billions of dollars to take it off IBM’s hands. That doesn’t sound like a successful business to me.

          • guardianl
          • 3 years ago

          You are correct. The difference between GF and IBM is that while both lost billions only one of them delivered a cutting edge node of their own…

    • chuckula
    • 3 years ago

    BTW, that Mubadala stock option is not good news for any AMD shareholders right now because it will dilute AMD’s shares and at least as of today Mubadala is getting a non trivial discount off of AMD’s share price in that purchase option.

    [Edit: Incidentally I have a rough estimate of about 770 million shares outstanding right now, so it’s just shy of a 10% dilution.]

    • tipoo
    • 3 years ago

    What I’m reading is, they paid a buttload because otherwise they were stuck in a wafer silicon agreement with Glofo, so this is a really expensive way of saying your fab sucks but we’re legally bound to you otherwise.

    Sucks that AMD was bound by it in the first place, but I’m excited that this means TSMC AMD products.

      • Srsly_Bro
      • 3 years ago

      Or Samsung

        • tipoo
        • 3 years ago

        Samsung process = Glofo process, no? Shared tech. But maybe only for the current fabs and not in the future?

      • CScottG
      • 3 years ago

      To be fair, they already knew Glofo’s fab sucked, they were after all part of AMD not that long ago.

        • flip-mode
        • 3 years ago

        The downvotes are inexplicable.

      • faramir
      • 3 years ago

      What is weird is that AMD has paid GloFo a pile of money only few years ago to get *INTO* this binding agreement, and now they are paying again to get out?

        • HisDivineOrder
        • 3 years ago

        Different management at the time, right? At the time, they believed GloFo when they said that their problems were all about getting their ducks in a row. “We’ll get it right. At the next process change! TRUST US!”

        It should be an argument familiar to AMD executives. They use it every time there’s a new architecture coming. “We’ll get it right. At the next architecture change! TRUST US!”

        If liars lie to liars, did anyone meaningful get lied to?

          • ronch
          • 3 years ago

          I think GF took that ‘ducks in a row’ idiom too seriously and put a row of ducks right inside the clean room.

    • Pwnstar
    • 3 years ago

    2016 to 2020 is four years, not five.

      • Laykun
      • 3 years ago

      [quote<] through the end of 2020 [/quote<] This makes it effecitive up to the start of 2021.

      • Captain Ned
      • 3 years ago

      Open one hand and count 16, 17, 18, 19, 20 on the available fingers.

      QED

        • Pwnstar
        • 3 years ago

        2016 is more than half over.

      • Srsly_Bro
      • 3 years ago

      Ahh, the common fencepost error makes an appearance.

      • Wirko
      • 3 years ago

      I’m tempted to downvote you but people out there in the real world still can’t agree on which was the first year of the third millenium.

    • Captain Ned
    • 3 years ago

    Ah, so AMD is giving GloFo the ARod treatment.

      • derFunkenstein
      • 3 years ago

      Hope it goes as well for AMD as it has for the Yankees in the last 10 days or so. That Gary Sanchez has been something else.

        • Captain Ned
        • 3 years ago

        Gives this fan some hope, Sanchez does. It’ll also go a long way to rehabilitating the Sanchez name in NYC sports history.

    • chuckula
    • 3 years ago

    If they go somewhere else then odds are it’s Samsung since the 14nm processes are quite similar.

    Now I’m not sure how much Samsung does foundry-wise since most of its capacity is for its own products but Samsung definitely has more fab firepower than GloFo.

    • Acidicheartburn
    • 3 years ago

    It sounds to me like AMD isn’t thrilled with the GloFo silicon and is looking elsewhere. If the GloFo silicon in Polaris is any indication, it might be that AMD isn’t happy with the power efficiency and clockspeeds its getting on that process, and frankly I don’t blame them. The RX 480 is a solid product that I would be happy to upgrade to but when you compare it with the clockspeeds and power efficiency nVidia has achieved with Pascal you can’t help but wonder if the silicon isn’t performing as well as it should.

      • nanoflower
      • 3 years ago

      Since it’s a different approach from Nvidia’s it is hard to say if the problem is the GF process or the AMD design that explains the difference between Pascal and Nvidia. We know that people have said for years that AMD’s GCN design puts more emphasis on the GPU doing more work per clock than Pascal (so it is likely to use more power.) Also we know that Nvidia took a different approach with Pascal (and possibly earlier designs) with their tile based approach which may also have an impact on how efficient their GPU is compared to AMD’s.

      Without having Pascal or Polaris built on both TSMC and GF processes I don’t think it’s possible to do more than speculate as to why Nvidia seems to be better at getting more out of their GPUs.

        • psuedonymous
        • 3 years ago

        “Without having Pascal or Polaris built on both TSMC and GF processes I don’t think it’s possible to do more than speculate as to why Nvidia seems to be better at getting more out of their GPUs.”

        While not an Nvidia GPU, there is one chip built on both processes: [url=http://www.anandtech.com/show/9686/the-apple-iphone-6s-and-iphone-6s-plus-review/3<]the Apple A9[/url<]. Though this is Samsung & TSMC, GloFo are using Samsung;s 14nm FinFET process in their own fabs. The die size is very close to identical, so the [i<]effective[/i<] process scale is very close despite the figure used in the branding (as expected, both use the same transistor fin pitch and interconnect pitch). And [url=http://www.tomshardware.com/news/iphone-6s-a9-samsung-vs-tsmc,30306.html<]the two have very similar power consumptions[/url<] with a small advantage to Samsung.

    • GodsMadClown
    • 3 years ago

    The future prospect of GloFo owning even a bit of AMD after AMD spun them off is just weirdly poetic.

      • tipoo
      • 3 years ago

      I’m reminded of how Jen-Hsun started his career at AMD, dropped out to start his own company, and now that company’s market cap dwarfs AMD.

      Glofo isn’t there yet, but…well, I do hope Zen goes well.
      I have a strong feeling RTG is angling to spin out if Zen flops.

    • chuckula
    • 3 years ago

    [b<]AMD:[/b<]We've already altered the wafer purchase agreement once. Pray that we do not do so again. [b<]GloFo:[/b<] Wait, you're going to pay us EVEN MORE to not make your chips? ALTER IT! DO IT NOW!

      • JustAnEngineer
      • 3 years ago

      [url<]https://www.youtube.com/watch?v=WpE_xMRiCLE[/url<]

        • chuckula
        • 3 years ago

        This deal is getting worse all the time!
        — AMD (wait, we’re the one altering it!)

          • ronch
          • 3 years ago

          Can we chalk this up to political correctness?

      • Voldenuit
      • 3 years ago

      AMD thinks they are Darth Vader but they’re actually President Skroob.

      • ronch
      • 3 years ago

      I just came back from the grocery where I told the guy at the cash register that I will pay the store for ten boxes of cereals if they let me take home only eight boxes.

      They gladly agreed. My powers of persuasion are impressive.

Pin It on Pinterest

Share This