AMD is shedding its stake in GlobalFoundries, the semiconductor foundry that it spun off in 2009. Initially, AMD used GlobalFoundries as its sole manufacturer, but it has increasingly turned to other companies such as TSMC after GlobalFoundries struggled to build working chips on its 32nm process.
At GlobalFoundries' creation, AMD held a 34.2 percent share. Since the spin-off, AMD has reduced that share, and now it is giving up its final 8.8 percent, leaving GlobalFoundries wholly owned by the United Arab Emirates government, via its Mubadala Development investment vehicle.
In addition to giving up its equity stake, the chip designer has also agreed to new terms for GlobalFoundries' manufacturing services. Under the previous agreement, GlobalFoundries had an exclusive right to build 28nm processors for AMD. Under the new agreement, AMD can now use TSMC's 28nm process—though it still plans to use GlobalFoundries in some capacity.
The new agreement gives AMD greater flexibility to choose its manufacturing partners—valuable in the light of GlobalFoudries' problems building the chips AMD needs—but at a price: AMD has agreed to pay GlobaFoundries $425 million cash over the next two years, and says that the deal will cost it a total of $703 million.
Flexible processor design and fabrication is central to AMD's plans for 2012-13, and with GlobalFoundries' continued difficulties, the decision to negotiate more flexible manufacturing terms makes some sense.
