AMD 2011 Annual Report Download - page 49

To the extent we choose not to participate in an equity financing of GF, ATIC is obligated to purchase our share
of GF securities, subject to ATIC’s funding commitments under the Funding Agreement.
ATIC’s obligations to provide funding are subject to certain conditions, including the accuracy of GF’s
representations and warranties in the Funding Agreement, the absence of a material adverse effect on GF or us
and the absence of a material breach or default by GF or us under the provisions of any transaction document.
There are additional funding conditions which are set forth in more detail in the Funding Agreement.
During 2009, ATIC contributed $260 million of cash to GF in exchange for GF securities consisting of $52
million aggregate principal amount of Class A Notes and $208 million aggregate principal amount of Class B
Notes. We declined to participate in the funding. As of December 26, 2009, our ownership interest in GF was
approximately 32% on a fully diluted basis.
Wafer Supply Agreement. The WSA governs the terms by which we purchase products manufactured by
GF. Pursuant to the WSA, during 2010, we purchased substantially all of our microprocessor unit (MPU) product
requirements from GF. During 2010, we paid GF for wafers on a cost-plus basis. If we acquire a third-party
business that manufactures MPU products, we will have up to two years to transition the manufacture of such
MPU products to GF. In addition, once GF establishes certain specific qualified processes for bulk silicon wafers,
we will purchase from GF, where competitive, specified percentages of our GPU requirements. At our request,
GF will also provide sort services to us on a product-by-product basis.
We will provide GF with binding product forecasts of our MPU and GPU product requirements. The price
for GPU products will be determined by the parties when GF is able to begin manufacturing GPU products for
us.
The WSA terminates no later than March 2, 2024. GF has agreed to use commercially reasonable efforts to
assist us to transition the supply of products to another provider, and to continue to fulfill purchase orders for up
to two years following the termination or expiration of the WSA. During the transition period, pricing for
microprocessor products will remain as set forth in the WSA, but our purchase commitments to GF will no
longer apply.
Governance Changes, Funding and Accounting in 2010
Deconsolidation of GF
On December 18, 2009, ATIC International Investment Company (ATIC II) acquired Chartered
Semiconductor Manufacturing Ltd. (Chartered). On December 28, 2009, with our consent, ATIC II, Chartered
and GF entered into a Management and Operating Agreement (MOA), which provided for the joint management
and operation of GF and Chartered, thereby allowing GF and Chartered to share costs, take advantage of
operating synergies and market wafer fabrications services on a collective basis. In order to allow for the signing
of the MOA on December 28, 2009, prior to obtaining any regulatory approvals, we agreed to irrevocably waive
rights under the Shareholders Agreement with respect to certain matters that require unanimous GF Board
approval. Additionally, if any such matters came before the GF Board, we agreed that our designated GF
directors will vote in the same manner as the majority of ATIC-designated GF Board members voting on any
such matters. As a result of waiving such approval rights, as of December 28, 2009, for financial reporting
purposes we no longer shared control with ATIC over GF. Based on our fully diluted ownership interest in GF,
we had the right to designate two directors to the GF Board of Directors as of December 25, 2010.
In June 2009, the FASB issued an amendment to improve financial reporting by enterprises involved with
variable interest entities. This new guidance became effective for us beginning the first day of 2010. Under the
new guidance, the investor who is deemed to both (i) have the power to direct the activities of the variable
interest entity that most significantly impact the variable interest entity’s economic performance and (ii) be
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