AMD 2010 Annual Report Download - page 21

Download and view the complete annual report

Please find page 21 of the 2010 AMD annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

efficiency of our microprocessors for servers. We are also focusing on delivering a range of low power integrated
platforms to serve key markets, including commercial clients, mobile computing, and gaming and media
computing. We believe that these integrated platforms will bring customers better time-to-market and increased
performance and energy efficiency. We also work with industry leaders on process technology, software and
other functional intellectual property and we work with others in the industry, public foundations, universities
and industry consortia to conduct early stage research and development.
Our research and development expenses for 2010, 2009, and 2008 were approximately $1.4 billion, $1.7
billion and $1.8 billion. For more information, see Part II, Item 7—“Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” or MD&A.
We conduct product and system research and development activities for our products in the United States
with additional design and development engineering teams located in Canada, India, Germany, United Kingdom,
Singapore, China, Japan, and Taiwan.
Manufacturing Arrangements and Assembly and Test Facilities
Third-Party Foundry Facilities
GLOBALFOUNDRIES, Inc. On March 2, 2009, together with Advanced Technology Investment
Company LLC (ATIC) and West Coast Hitech L.P., (WCH), acting through its general partner, West Coast
Hitech G.P., Ltd., we formed GLOBALFOUNDRIES, Inc. (GF), a manufacturing joint venture that manufactures
semiconductor products and provides certain foundry services to us. Pursuant to the Master Transaction
Agreement entered into among the parties on October 6, 2008, as amended, we contributed certain manufacturing
-related assets and liabilities to GF in exchange for securities of GF and the assumption of specified AMD
liabilities by GF. At the closing of the transactions, we also entered into a Shareholders’ Agreement (the
Shareholders’ Agreement), a Funding Agreement (the Funding Agreement), and a Wafer Supply Agreement (the
Wafer Supply Agreement), with ATIC and GF, certain terms of each of which are summarized below.
Shareholders’ Agreement. The Shareholders’ Agreement sets forth the rights and obligations of AMD and
ATIC as shareholders of GF. The number of directors a GF shareholder may designate is determined according
to the percentage of GF shares it owns on a fully converted to GF Ordinary Shares basis. We currently have the
right to designate one director. Pursuant to the Shareholders’ Agreement, if a change of control of AMD occurs
within two years of the closing of the transactions, or March 2, 2011, ATIC will have the right to put any or all
GF securities (valued at their fair market value) held by ATIC and its permitted transferees to us in exchange for
cash. In addition, in the event of a change of control of AMD, ATIC will have the option to purchase in cash any
or all GF securities (valued at their fair market value) held by us and our permitted transferees, ATIC can require
us or the other party to the change in control transaction to assume a pro-rata portion of ATIC’s funding
commitment under the Funding Agreement until 2013, and ATIC can require the other party to the change in
control transaction to guarantee all of our obligations under the transaction documents.
Funding Agreement. The Funding Agreement provides for the future funding of GF and governs the terms
and conditions under which ATIC is obligated to provide such funding. Pursuant to the Funding Agreement,
ATIC committed to additional equity funding of a minimum of $3.6 billion and up to $6.0 billion to be provided
in phases over a five-year period commencing from the closing of the transactions. We have the right, but not the
obligation, to provide additional future capital to GF in an amount pro rata to our interest in the fully converted
Ordinary Shares of GF. 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.
On December 27, 2010, ATIC International Investment Company LLC, an affiliate of ATIC, contributed all
of the outstanding Ordinary Shares of GLOBALFOUNDRIES Singapore Pte. Ltd., (formerly Chartered
13