AMD 2012 Annual Report Download - page 50

As part of our strategy to respond to the macroeconomic issues and the changes occurring in our industry,
during 2012, we made key strategic investments to align our business to a changing computing landscape and to
position ourselves to take advantage of new opportunities in adjacent high-growth markets. In March 2012, we
acquired SeaMicro, Inc. (SeaMicro), an energy-efficient, high-bandwidth micro-server company, to accelerate
our strategy to deliver differentiated micro-server solutions to cloud data centers. In June 2012, we, along with
ARM, Imagination Technologies, Media Tek, Qualcomm, Samsung and Texas Instruments established the
Heterogeneous System Architecture (HSA) Foundation, a non-profit consortium established to define and
promote an open standards-based approach to heterogeneous computing. In October 2012, we announced that we
will design 64-bit ARM®technology-based processors in addition to our x86 processors for multiple markets,
starting with cloud and data center servers. We expect our first ARM technology-based processor will be a
highly-integrated, 64-bit multicore system-on-a-chip optimized for the dense, energy-efficient servers. The first
ARM technology-based AMD Opteron processor for servers is targeted for production in 2014 and is expected to
integrate our AMD SeaMicro Freedom supercompute fabric.
In addition, in the fourth quarter of 2012, we announced a restructuring plan to improve our cost structure
and enhance our competitiveness in core growth areas. This restructuring plan primarily involves a reduction of
our global workforce of approximately 14% as well as asset impairments and facility consolidations. We expect
the restructuring action will result in operational savings, primarily in operating expenses, of approximately $190
million in 2013.
Further, to better align with today’s PC market dynamics, we entered into a third amendment to the WSA
with GF. Pursuant to the third amendment, we modified our wafer purchase commitments for the fourth quarter
of 2012 under the second amendment to the WSA. In addition, we agreed to certain pricing and other terms
applicable to wafers for our microprocessor and APU products to be delivered by GF to us during 2013 and
through December 31, 2013. Pursuant to the third amendment, we committed to purchase a fixed number of
production wafers at negotiated prices in the fourth quarter of 2012 and through December 31, 2013. GF agreed
to waive a portion of our wafer purchase commitments for the fourth quarter of 2012. In consideration of this
waiver, we agreed to pay GF a fee of $320 million. As a result, we recorded a $273 million LCM charge in the
fourth quarter of 2012. The cash impact of this $320 million fee will be spread over several quarters, with $80
million that was paid by December 28, 2012 and $40 million payable by April 1, 2013. For the remainder of the
fee, on the same date we entered into the third amendment, we issued a $200 million promissory note to GF that
matures on December 31, 2013. Under the third amendment to the WSA, we committed to purchase from GF
wafers for approximately $1.15 billion in 2013 and $250 million during the first quarter of 2014. We expect to
negotiate the remainder of our 2014 purchase commitments from GF in 2013.
Despite the challenging macroeconomic environment, we continued to focus on executing our engineering
milestones. We launched our next AMD A-Series APU, codenamed “Trinity,” and our next generation AMD
E-Series APU, codenamed “Brazos 2.0.” We also announced our AMD Z-60 APU, codenamed “Hondo,” our
lowest powered APU designed for the performance tablet and small form factor PC market. We launched our
AMD Opteron™ 3200, 4300 and 3300 Series server processor platforms based on our next-generation
“Piledriver” core architecture. We announced AMD’s SeaMicro SM15000 server chassis, which extends fabric-
based computing across racks and aisles of the data center to connect directly to large data storage systems. With
respect to our graphics products, we launched our AMD Radeon™ HD 7950 graphics processor, and our AMD
Radeon HD 7700 and 7800 series graphics processors, all based on 28nm process technology and designed for
enthusiast desktop gamers.
GLOBALFOUNDRIES
Formation and Accounting in 2009
On March 2, 2009, we consummated the transactions contemplated by the Master Transaction Agreement
among us, Advanced Technology Investment Company LLC (ATIC), and West Coast Hitech L.P. (WCH),
pursuant to which we formed GF. Based on the structure of the transaction and the guidance on accounting for
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