GLOBALFOUNDRIES |
3 Months Ended |
|---|---|
Mar. 30, 2019 | |
| Related Party Transactions [Abstract] | |
| GLOBALFOUNDRIES |
GLOBALFOUNDRIES
Wafer Supply Agreement. In March 2009, the Company and GLOBALFOUNDRIES Inc. (GF) entered into a Wafer Supply Agreement (the WSA) under which, among other terms, the Company would purchase wafers from GF. The WSA, which has been amended from time to time, governs the terms by which the Company purchases products manufactured by GF.
Seventh Amendment to Wafer Supply Agreement. On January 28, 2019, the Company entered into a seventh amendment (the Seventh Amendment) to the WSA with GF. The Seventh Amendment modifies certain purchase commitments, pricing and other terms of the WSA applicable to wafer purchases at the 12 nm technology node and above by the Company for the period commencing on January 1, 2019 and continuing through March 1, 2024.
The Seventh Amendment also provides the Company with full flexibility to contract with any wafer foundry with respect to all products manufactured using 7nm and smaller technology nodes without any one-time payments or royalties by the Company to GF.
Further, the Company and GF agreed to modify the annual wafer purchase targets previously agreed to for years 2019 and 2020. The parties also agreed to an annual wafer purchase target for 2021 and agreed to pricing for wafers purchased for years 2019, 2020 and 2021. If the Company does not meet the annual wafer purchase target for any of these years, the Company will be required to pay to GF a portion of the difference between the Company’s actual wafer purchases and the wafer purchase target for that year. The Company expects that its future purchases from GF will be material under the WSA, which is in place until March 1, 2024. The Company also agreed to continue to make quarterly payments to GF based on the volume of certain wafers purchased from another wafer foundry.
The Company’s total purchases from GF related to wafer manufacturing, research and development activities and other during the three months ended March 30, 2019 and March 31, 2018 were $378 million and $398 million, respectively. Included in the total purchases during the three months ended March 30, 2019 were amounts related to the volume of certain wafers purchased from another wafer foundry, as agreed by the Company and GF. As of March 30, 2019 and December 29, 2018, the amount of prepayment and other receivables related to GF was $12 million and $18 million, respectively, included in Prepayment and receivables—related parties on the Company’s condensed consolidated balance sheets. As of March 30, 2019 and December 29, 2018, the amount of payable to GF was $246 million and $326 million, respectively, included in Payables to related parties on the Company’s condensed consolidated balance sheets.
Warrant Agreement. On August 30, 2016, in consideration for the limited waiver and rights under the WSA Sixth Amendment, the Company entered into a warrant agreement (the Warrant Agreement) with West Coast Hitech L.P. (WCH), a wholly-owned subsidiary of Mubadala Development Company PJSC (Mubadala). Under the Warrant Agreement, WCH and its permitted assigns were entitled to purchase 75 million shares of the Company’s common stock (the Warrant Shares) at a purchase price of $5.98 per share.
During the three months ended March 30, 2019, WCH exercised its warrant to purchase 75 million shares of the Company’s common stock at a purchase price of $5.98 per share for a total amount of $448.5 million.
GF continues to be a related party of the Company because Mubadala and Mubadala Technology Investments LLC (Mubadala Tech, a party to the WSA) are affiliated with WCH, and a member of the Company's Board of Directors is associated with Mubadala. GF, WCH and Mubadala Tech are wholly-owned subsidiaries of Mubadala.
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