AMD 2011 Annual Report Download - page 88

ATIC is able to reduce its funding commitment accordingly. The Company has the right, but not the obligation,
to provide additional future capital to GF in an amount pro rata to its interest in the fully converted Ordinary
Shares of GF. To the extent the Company chooses not to participate in an equity financing of GF, ATIC is
obligated to purchase its 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
AMD and the absence of a material breach or default by GF or AMD 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, pursuant to a funding request from GF in accordance with the Funding Agreement, 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. The Company
declined to participate in the funding. As of December 26, 2009, the Company’s ownership interest in GF (on a
fully converted to Ordinary Shares basis) was approximately 32%.
Wafer Supply Agreement. The WSA governs the terms by which the Company purchases products
manufactured by GF. Pursuant to the WSA, during 2010, the Company purchased substantially all of its
microprocessor unit (MPU) product requirements from GF. During 2010, the Company paid GF for wafers on a
cost-plus basis. If the Company acquires a third-party business that manufactures MPU products, it 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, the Company will purchase from GF, where competitive,
specified percentages of its GPU requirements. At its request, GF will also provide sort services to the Company
on a product-by-product basis.
The Company will provide GF with binding product forecasts of its 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 the Company.
The WSA terminates no later than March 2, 2024. GF has agreed to use commercially reasonable efforts to
assist the Company 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 the Company’s 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 the Company’s 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, the Company
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, the Company
agreed that its 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 the Company no longer shared the control with ATIC over GF. Based on
its fully diluted ownership interest in GF, the Company had the right to designate two directors to the GF Board
of Directors as of December 25, 2010.
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