AMD 2010 Annual Report Download - page 22

Semiconductor Manufacturing Ltd.) (GFS), to GF. As a result, we amended and restated the Shareholders’
Agreement and the Funding Agreement. Subject to certain exceptions set forth in the Amended and Restated
Shareholders’ Agreement, our right to designate one representative to the GF board of directors will continue for
at least two years following the date on which our ownership in GF, on a fully converted to GF Ordinary Shares
basis, falls below 10%, the point at which we previously lost the right to such board representative. Pursuant to
the Amended and Restated Funding Agreement, for each equity funding under the Funding Agreement on or
after November 17, 2010, the securities issued in consideration thereof will consist solely of GF’s Class A
Preferred Shares. In addition, the purchase price per Class A Preferred Share is determined by dividing GF’s net
tangible assets (derived from its most recent fiscal year-end audited consolidated balance sheet) by GF’s total
number of outstanding preferred shares (assuming the conversion of any outstanding GF Class A subordinated
convertible notes into Class A Preferred Shares and Class B subordinated convertible notes into Class B
Preferred Shares) as of the date of the balance sheet referred to above and multiplying by 1.10. Prior to
November 17, 2010, the funding multiple was 0.90.
Wafer Supply Agreement. We purchase substantially all of our microprocessor product requirements from
GF pursuant to the terms of the Wafer Supply Agreement. We currently pay GF for wafers on a cost-plus basis.
If we acquire a third-party business that manufactures microprocessor products, we will have up to two years to
transition the manufacture of such products to GF. In addition, once GF develops certain specific qualified
processes for bulk silicon wafers, we will purchase from GF, where competitive, specified percentages of our
GPU wafer requirements. We agreed not to sell, transfer or dispose of all or substantially all of our assets related
to GPU products and related technology to any third party without GF’s consent, unless the transferee agrees to
be bound by the terms of the Wafer Supply Agreement, including its minimum purchase obligations, where
competitive, with respect to GPU products. We will provide GF with binding product forecasts of our product
requirements. After reviewing forecasts provided by us, as agreed by the parties, GF will allocate capacity
sufficient to produce our microprocessor product volumes as set forth in the binding forecasts. At our request, GF
will also provide sort services to us on a product-by-product basis. The price for GPU products will be
determined by the parties when GF is able to begin manufacturing GPU products for us.
The Wafer Supply Agreement terminates no later than March 2, 2024. However, the Wafer Supply
Agreement may be terminated if a business plan deadlock occurs because AMD or ATIC, as the shareholders of
GF, are unable to agree on GF’s annual business plan and ATIC elects to enter into a transition period pursuant to
the Funding Agreement. GF agreed to use commercially reasonable efforts to assist us to transition the supply of
products to another provider and continue to fulfill purchase orders for up to two years following the termination
or expiration of the Wafer Supply Agreement. During the transition period, pricing for microprocessor products
will remain as set forth in the Wafer Supply Agreement, but our purchase commitments to GF will no longer
apply.
GF fabricates wafers for our microprocessors at its facilities primarily on 45nm process technology. In
addition, we are in the process of qualifying GF’s 32nm process technology for our products.
We also have foundry arrangements with Taiwan Semiconductor Manufacturing Company (TSMC) for the
production of our graphics and chipset products, embedded processors, as well as two of our APU products.
Currently, we are in production in TSMC’s 300 millimeter and 200 millimeter fabrication facilities in
technologies ranging from 40nm to 250nm. We are currently in the process of qualifying 28nm process
technology at multiple foundries for certain products. Smaller process geometries can lead to gains in graphics
processing performance, lower power consumption and lower per unit manufacturing costs.
Other Third-Party Manufacturers
We outsource board-level graphics product manufacturing to third-party manufacturers. These include
Foxconn and PC Partner with locations in China. Our facility in Markham, Ontario, Canada is primarily devoted
to prototyping for new graphics product introductions.
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