AMD updates Globalfoundries deal buys less wafers

[Hilbert Hagedoorn]

AMD has amended its wafer supply agreement with Globalfoundries. Under the new agrement AMD significantly reduced its wafer purchase commitments, the chip designer currently estimates will will purcha...

AMD updates Globalfoundries deal buys less wafers

[heffeque]

I this something good or something bad? I'm thinking bad, but... maybe someone can give us some educated comment on this matter?

[Noisiv]

$320 million in penalties for AMD

Did I read that correctly?

[sykozis]

Yes Noisiv, unfortunately you did. AMD is being penalized $320 million for reducing their wafer purchases from GloFo.... Considering the issues they've had with GloFo, they should get a pass on that penalty imho....

[morbias]

wat


This can't be right, surely?

AMD paid $320M in order to reduce their Q4 wafer commitment by $375M, so they basically saved themselves a measly $55M outgoing on new silicon but have lost themselves 78% of saleable product in the process? Is that not the worst business decision of the millennium?

If you're going to have that much excess product then just sell it for less, even if you sell it for a loss you're not going to lose $320M unless you try really exceptionally hard.

[BlackZero]

It's because AMD has to keep/predict cash reserves will remain at a certain level to meet restrictions put up by suppliers. Buying wafers that they may not sell will reduce it's expected liquidity and could lead to supplier commitments not being met, increasing risks for the business. Investors seem to have responded favourably with a 1% increase in share values.

http://www.bloomberg.com/news/2012-1...-pc-slump.html

[JohnMaclane]

Originally Posted by morbias

wat


This can't be right, surely?

AMD paid $320M in order to reduce their Q4 wafer commitment by $375M, so they basically saved themselves a measly $55M outgoing on new silicon but have lost themselves 78% of saleable product in the process? Is that not the worst business decision of the millennium?

If you're going to have that much excess product then just sell it for less, even if you sell it for a loss you're not going to lose $320M unless you try really exceptionally hard.

I think the savings are much larger then the 55 million.

The wafers would still have to be cut and packaged, a process which is not exactly cheap. Then there are all the logistical costs saved and the fact that the PC market is shrinking.

So while its sad news I think AMD is not retarded and did this for a reason, plus 55 million is by no measure a small number.

[heffeque]

I knew it wasn't as easy as "it's bad news"