AMD and its primary fab partner GlobalFoundries have signed an updated five-year wafer supply agreement that will extend through the end of 2020. The restructuring simultaneously deepens the commitment between the partners and gives AMD limited freedom to see other foundries. In exchange, GlobalFoundries will get some additional compensation.
Per the terms of the agreement, which pertains to AMD's microprocessor, graphics processor, and semi-custom products, AMD will make $25 million cash installments to GlobalFoundries over the next four quarters, for a total cash transfer of $100 million. Beginning in 2017, AMD will be required to make quarterly payments to GlobalFoundries based on the volume of certain wafers it is obtaining from another foundry.
The agreement also stipulates annual wafer purchase targets for the five-year period, sets fixed wafer prices for 2016, and provides a framework for yearly wafer pricing. If annual targets are not met, a penalty will be imposed based on the difference between actual wafer purchases and the target for that year.
takyon: Those are some of the costs of outsourcing your semiconductor fabrication. Let's hope AMD meets those targets.
Related Stories
GlobalFoundries has halted development of its "7nm" low power node, will fire 5% of its staff, and will also halt most development of smaller nodes (such as "5nm" and "3nm"):
GlobalFoundries on Monday announced an important strategy shift. The contract maker of semiconductors decided to cease development of bleeding edge manufacturing technologies and stop all work on its 7LP (7 nm) fabrication processes, which will not be used for any client. Instead, the company will focus on specialized process technologies for clients in emerging high-growth markets. These technologies will initially be based on the company's 14LPP/12LP platform and will include RF, embedded memory, and low power features. Because of the strategy shift, GF will cut 5% of its staff as well as renegotiate its WSA and IP-related deals with AMD and IBM. In a bid to understand more what is going on, we sat down with Gary Patton, CTO of GlobalFoundries.
[...] Along with the cancellation of the 7LP, GlobalFoundries essentially canned all pathfinding and research operations for 5 nm and 3 nm nodes. The company will continue to work with the IBM Research Alliance (in Albany, NY) until the end of this year, but GlobalFoundries is not sure it makes sense to invest in R&D for 'bleeding edge' nodes given that it does not plan to use them any time soon. The manufacturer will continue to cooperate with IMEC, which works on a broader set of technologies that will be useful for GF's upcoming specialized fabrication processes, but obviously it will refocus its priorities there as well (more on GF's future process technologies later in this article).
So, the key takeaway here is that while the 7LP platform was a bit behind TSMC's CLN7FF when it comes to HVM – and GlobalFoundries has never been first to market with leading edge bulk manufacturing technologies anyway – there were no issues with the fabrication process itself. Rather there were deeper economic reasons behind the decision.
GlobalFoundries would have needed to use deep ultraviolet (DUV) instead of extreme ultraviolet (EUV) lithography for its initial "7nm" chips. It would have also required billions of dollars of investment to succeed on the "7nm" node, only to make less "7nm" chips than its competitors. The change in plans will require further renegotiation of GlobalFoundries' and AMD's Wafer Supply Agreement (WSA).
Meanwhile, AMD will move most of its business over to TSMC, although it may consider using Samsung:
GlobalFoundries Establishes Avera Semiconductor: a Custom Chip Company
GlobalFoundries this week announced that it has spun off its ASIC Solutions division, establishing Avera Semiconductor, a wholly owned subsidiary that will help fabless chip developers to design their products. Avera will work closely with GlobalFoundries' customers to enable them take advantage of various process technologies that GF has, but the company will also establish ties with other contract makers of semiconductors to help their clients develop chips to be made using leading edge process technologies at 7 nm and beyond.
[...] The new wholly owned subsidiary of GlobalFoundries has over 850 employees, an annual revenue of over $500 million, and ongoing projects worth $3 billion. By working not only with clients of GlobalFoundries, but expanding to customers of companies like Samsung Foundry and TSMC, Avera has a chance to increase its earnings over time. Avera Semi is led by Kevin O'Buckley, a former head of ASIC Solutions, who joined GlobalFoundries from IBM.
Shuffling money on the Titanic?
Previously: AMD, GlobalFoundries Renew Vows, Focus on Path to 7nm
GlobalFoundries to Spend $10-12 Billion on a 7nm Fab, Possibly $14-18 Billion for 5nm
AnandTech Interview With the CTO of GlobalFoundries: 7nm EUV and 5 GHz Clock Speeds
GlobalFoundries Abandons "7nm LP" Node, TSMC and Samsung to Pick Up the Slack
Related: Can Intel Really Share its Fabs?
GlobalFoundries: Next-generation chip factories will cost at least $10 billion
The economics of the chip industry are pretty staggering. Sanjay Jha, CEO of contract chip manufacturer Globalfoundries, recently told me that it could cost between $10 billion and $12 billion to build a next-generation chip factory based on the latest technology, dubbed 7-nanometer production. And one for the generation after that, dubbed 5-nanometer production, could cost $14 billion to $18 billion.
There are only a few companies in the world that can afford to spend that much money on a chip factory. And they can do it because those chips are expected to generate billions of dollars in revenue over the life of the factory.
Dean Takahashi from VentureBeat interviewed Sanjay Jha, CEO of GlobalFoundries:
Basically, the numbers don't mean much these days. I think Samsung has talked about 10nm, 11nm, 14nm, 8nm, 7nm, 6nm. I don't know what they mean. The way to think about 12nm is it has higher performance and more scale than 14nm. It's not quite the scaling or performance of 10nm. Performance may be very close to 10nm, though.
(Score: 2) by butthurt on Sunday September 04 2016, @10:17PM
GlobalFoundries was created by the divestiture of the manufacturing arm of Advanced Micro Devices (AMD) on March 2, 2009, expanded through the acquisition of Chartered Semiconductor on January 23, 2010, and further expanded through the acquisition of IBM Microelectronics on July 1, 2015. The Emirate of Abu Dhabi is the owner of the company [...]
—https://en.wikipedia.org/wiki/GlobalFoundries [wikipedia.org]
(Score: -1, Spam) by Anonymous Coward on Sunday September 04 2016, @11:02PM
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(Score: 0) by Anonymous Coward on Monday September 05 2016, @04:41AM
Yep, a collection of odd bed-fellows. A good friend went with GF when IBM sold off their Burlington VT fab. Sounds like this AMD contract will keep his job going for at least another 5 years, which will be just about enough to put his kid through college.
(Score: 0) by Anonymous Coward on Sunday September 04 2016, @10:19PM
She's bulky and she's noisy, but her cabinets are just the right size, and we make sweet digital love all night.
(Score: 3, Funny) by Scruffy Beard 2 on Sunday September 04 2016, @10:44PM
Now we need a -1 TMI mod :P
(Score: -1, Troll) by Anonymous Coward on Sunday September 04 2016, @11:12PM
Disregard that, I suck cocks.
-- gewg_
(Score: 2) by Snotnose on Sunday September 04 2016, @11:16PM
CSB time. Back in the 80 we switched to an all Sun network and the company wanted to get rid of our 2 VAX 11-750s. One of the sysadmins took one home, installed it in his laundry room, and used it to do homework for the second half of his BS in computer science. When he graduated and moved out he left the VAX in the laundry room.
When he graduated he moved up to the bay area to work for a startup called Silicon Graphics. Got rich as hell. Also one of the nicest guys I've ever met.
Bad decisions, great stories
(Score: 3, Funny) by Anonymous Coward on Monday September 05 2016, @12:14AM
What profiteth a Man to gain the whole World and lose his own VAX?
(Score: 0) by Anonymous Coward on Monday September 05 2016, @12:52AM
Your BS story should include a disclaimer saying you can't get rich with a degree in CS. You need an H1B visa, you won't make it rich working in tech, and you'll be lucky if you make it poor.
(Score: 1, Insightful) by Anonymous Coward on Monday September 05 2016, @01:50AM
You don't get rich with a degree unless it's medical and you're super lucky. You only get a degree in IT if you lack ideas or ambition. Employers know this.
(Score: 0) by Anonymous Coward on Monday September 05 2016, @02:16AM
A degree in CS was a professional degree before popular opinion decided CS and IT are the same thing because "computers" are cheap shit so the "scientists" who study them must be overvalued. Economic value dictates value to society, and IT losers are fucking worthless morons.
(Score: 2) by quintessence on Monday September 05 2016, @04:57AM
Economic value dictates value to society
Not to argue too ardently against this, but society is basically for shit in making meaningful valuations.
Computers stop running tomorrow and the idiot child who can find the reset button is suddenly Master of the Universe.
I doubt most CEOs can justify their salaries based upon management of company earnings.
(Score: 0) by Anonymous Coward on Monday September 05 2016, @07:44AM
Not to argue too ardently against this, but society is basically for shit in making meaningful valuations.
And yet without that salad, the man would starve.
(Score: 1, Interesting) by Anonymous Coward on Monday September 05 2016, @08:12AM
Oh, I'd go further.
Standard waiter can say "fuck you" and walk nearly any time he wants. It's not like there are ten thousand applicants for the job, and he has a decent selection to find work accommodation that meets his needs whether it's hours, work crew, or closeness to his home.
He isn't tied down by a mortgage, doesn't have to wait to find a buyer before he can pack up and move, and is free to chase his luck without dealing with the albatross of loss aversion.
In short, he's trade some dollars for peace of mind. Some people are like that.
Bossman, not so much. And it's painful to rationalize how much you are owned by the job, and even more to realize how little you can be bought for.
Some mates of mine moved into higher management. I wave at them at their desks as I'm leaving for the day. They've confided they fucked-up. For a few shekels more, they are working insane hours, worry about every fluttering butterfly, and see us more than their families.
And of course, a brand new boss needs a brand new car with a brand new payment. They are in hock more than me.
Anyhoo some people are the A-types, which is fine, but it would take a very large sum to essentially buy more comfort than I have now.
(Score: 0) by Anonymous Coward on Monday September 05 2016, @04:13AM
He said "cabinets".
(Score: 0) by Anonymous Coward on Monday September 05 2016, @05:47PM
Let's hope AMD meets those targets.
I wonder if AMD might do better if they continued to support Windows 7 with their future CPUs and chipsets.
http://www.pcworld.com/article/3112663/software/microsoft-made-em-do-it-the-latest-kaby-lake-zen-chips-will-support-only-windows-10.html [pcworld.com]
From what I know there are a number of large enterprises who have only just switched from Windows XP to Windows 7 and they sure won't be switching for a fair number of years. They might do a hardware refresh within 5 years but not a software one. And if Intel's stuff doesn't support Windows 7 in 3 years time while AMD is still around and does, then AMD might gain some share.
(Score: 2) by linuxrocks123 on Tuesday September 06 2016, @03:01AM
No one is making incompatible changes to the x86 architecture. Older Windows versions will almost certainly run just fine, even if they're not officially "supported".