Advanced Micro Devices, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Globalfoundries

Globalfoundries	6 Months Ended
Jul. 02, 2011
Globalfoundries
Globalfoundries	NOTE 2. GLOBALFOUNDRIES On December 27, 2010, ATIC International Investment Company LLC (ATIC II), an affiliate of Advanced Technology Investment Company LLC (ATIC), contributed all of the outstanding Ordinary Shares of Chartered Semiconductor Manufacturing Ltd. (currently known as GLOBALFOUNDRIES Singapore Pte. Ltd. or GFS) to GF in exchange for 2,808,981 newly issued shares of GF Class A Preferred Shares. The issuance of Class A Preferred Shares to ATIC II diluted the Company's ownership interest in GF from 23% to 14% on a fully diluted basis and from 34% to 18% on a voting basis. As the result of this dilution, during the first quarter of 2011, the Company recognized a non-cash gain of approximately $492 million, net of certain transaction related charges, in Equity income (loss) and dilution gain in investee, net. In connection with the Company's reduced ownership interest in GF, the number of AMD-designated directors on GF's board decreased from two to one. Following the GFS contribution and governance changes described above, the Company assessed its ability to exercise significant influence over GF and considered factors such as its representation on GF's board of directors, participation in GF's policy-making processes, material intra-entity transactions, interchange of managerial personnel, technological dependency, and the extent of ownership by the Company in relation to ownership by the other shareholders. Based on the results of its assessment, the Company concluded that it no longer had the ability to exercise significant influence over GF. Accordingly, as of the first quarter of 2011, the Company changed its method of accounting for its ownership interest in GF from the equity method to the cost method of accounting. As of July 2, 2011, the Company's investment balance in GF was $486 million. Under the cost method of accounting, the Company no longer recognizes any share of GF's net income or loss in its condensed consolidated statement of operations. In addition, the Company reviews the carrying value of its investment in GF for impairment at each reporting period. Impairment indicators, among other factors, include significant deterioration in GF's earnings performance or business prospects, significant change in market conditions in which GF operates, and GF's ability to continue as a going concern. An impairment charge will be recorded if the carrying value of the investment exceeds its fair value, and such impairment is determined to be "other than temporary." As of July 2, 2011, the Company's ownership interest in GF was 11% on a fully diluted basis and 13% on a voting basis. GF is a related party of the Company. The Company's total purchases from GF related to wafer manufacturing and research and development activities during the second quarter of 2011 and for the six months ended July 2, 2011 amounted to approximately $158 million and $421 million, respectively. In addition, during the first quarter of 2011, the Company incurred a charge of $24 million related to a payment to GF, primarily for certain manufacturing assets of GF, which do not benefit the Company. Wafer Supply Agreement. The Wafer Supply Agreement (WSA) governs the terms by which the Company purchases products manufactured by GF. Pursuant to the WSA, the Company currently purchases all of its microprocessor unit product requirements from GF, except accelerated processing units (APUs) used in the Brazos platform. On April 2, 2011, the Company amended the WSA. The primary effect of the amendment was to change the pricing methodology applicable to wafers delivered in 2011 for the Company's microprocessor, including APU, products. The amendment also modified the Company's existing commitments regarding the production of certain graphics processing unit (GPU) and chipset products at GF. Pursuant to the amendment, GF has committed to provide the Company with, and the Company has committed to purchase, a fixed number of 45nm and 32nm wafers per quarter in 2011. The Company pays GF a fixed price for 45nm wafers delivered in 2011. The Company's price for 32nm wafers varies based on the wafer volumes and manufacturing yield of such wafers and is based on good die. In addition, the Company also agreed to pay an additional quarterly amount to GF during 2012 totaling up to $430 million if GF meets specified conditions related to continued availability of 32nm capacity as of the beginning of 2012. The Company expects GF will meet the conditions to earn these payments. In 2012, the Company will compensate GF on a cost plus basis for projected manufacturing capacity that it has requested for its microprocessor, including its APU, products. The Company currently estimates that it will pay GF between approximately $1.1 to $1.3 billion in 2011 and $1.5 to $1.9 billion in 2012 for wafer purchases under the WSA, as amended. The Company based its 2011 and 2012 estimated costs in part on its current expectations regarding GF's manufacturing yields and wafer volumes. These costs could increase or decrease as a result of variations in those yields and several other factors including its current expectations regarding demand for its products. In addition, the Company estimates that additional purchase obligations in connection with research and development related to GF wafer production will be approximately $82 million in 2011. The Company is not able to meaningfully quantify or estimate its additional purchase obligations in connection with research and development related to GF wafer production for 2012. In addition, the Company is not able to meaningfully quantify or estimate its purchase obligations to GF beyond 2012, but it expects that its future purchases from GF will continue to be material under the WSA.

Globalfoundries

6 Months Ended

Jul. 02, 2011

NOTE 2. GLOBALFOUNDRIES

On December 27, 2010, ATIC International Investment Company LLC (ATIC II), an affiliate of Advanced Technology Investment Company LLC (ATIC), contributed all of the outstanding Ordinary Shares of Chartered Semiconductor Manufacturing Ltd. (currently known as GLOBALFOUNDRIES Singapore Pte. Ltd. or GFS) to GF in exchange for 2,808,981 newly issued shares of GF Class A Preferred Shares. The issuance of Class A Preferred Shares to ATIC II diluted the Company's ownership interest in GF from 23% to 14% on a fully diluted basis and from 34% to 18% on a voting basis. As the result of this dilution, during the first quarter of 2011, the Company recognized a non-cash gain of approximately $492 million, net of certain transaction related charges, in Equity income (loss) and dilution gain in investee, net. In connection with the Company's reduced ownership interest in GF, the number of AMD-designated directors on GF's board decreased from two to one.

Following the GFS contribution and governance changes described above, the Company assessed its ability to exercise significant influence over GF and considered factors such as its representation on GF's board of directors, participation in GF's policy-making processes, material intra-entity transactions, interchange of managerial personnel, technological dependency, and the extent of ownership by the Company in relation to ownership by the other shareholders. Based on the results of its assessment, the Company concluded that it no longer had the ability to exercise significant influence over GF. Accordingly, as of the first quarter of 2011, the Company changed its method of accounting for its ownership interest in GF from the equity method to the cost method of accounting. As of July 2, 2011, the Company's investment balance in GF was $486 million.

Under the cost method of accounting, the Company no longer recognizes any share of GF's net income or loss in its condensed consolidated statement of operations. In addition, the Company reviews the carrying value of its investment in GF for impairment at each reporting period. Impairment indicators, among other factors, include significant deterioration in GF's earnings performance or business prospects, significant change in market conditions in which GF operates, and GF's ability to continue as a going concern. An impairment charge will be recorded if the carrying value of the investment exceeds its fair value, and such impairment is determined to be "other than temporary."

As of July 2, 2011, the Company's ownership interest in GF was 11% on a fully diluted basis and 13% on a voting basis. GF is a related party of the Company. The Company's total purchases from GF related to wafer manufacturing and research and development activities during the second quarter of 2011 and for the six months ended July 2, 2011 amounted to approximately $158 million and $421 million, respectively. In addition, during the first quarter of 2011, the Company incurred a charge of $24 million related to a payment to GF, primarily for certain manufacturing assets of GF, which do not benefit the Company.

Wafer Supply Agreement. The Wafer Supply Agreement (WSA) governs the terms by which the Company purchases products manufactured by GF. Pursuant to the WSA, the Company currently purchases all of its microprocessor unit product requirements from GF, except accelerated processing units (APUs) used in the Brazos platform. On April 2, 2011, the Company amended the WSA. The primary effect of the amendment was to change the pricing methodology applicable to wafers delivered in 2011 for the Company's microprocessor, including APU, products. The amendment also modified the Company's existing commitments regarding the production of certain graphics processing unit (GPU) and chipset products at GF. Pursuant to the amendment, GF has committed to provide the Company with, and the Company has committed to purchase, a fixed number of 45nm and 32nm wafers per quarter in 2011. The Company pays GF a fixed price for 45nm wafers delivered in 2011. The Company's price for 32nm wafers varies based on the wafer volumes and manufacturing yield of such wafers and is based on good die. In addition, the Company also agreed to pay an additional quarterly amount to GF during 2012 totaling up to $430 million if GF meets specified conditions related to continued availability of 32nm capacity as of the beginning of 2012. The Company expects GF will meet the conditions to earn these payments. In 2012, the Company will compensate GF on a cost plus basis for projected manufacturing capacity that it has requested for its microprocessor, including its APU, products.

The Company currently estimates that it will pay GF between approximately $1.1 to $1.3 billion in 2011 and $1.5 to $1.9 billion in 2012 for wafer purchases under the WSA, as amended. The Company based its 2011 and 2012 estimated costs in part on its current expectations regarding GF's manufacturing yields and wafer volumes. These costs could increase or decrease as a result of variations in those yields and several other factors including its current expectations regarding demand for its products. In addition, the Company estimates that additional purchase obligations in connection with research and development related to GF wafer production will be approximately $82 million in 2011. The Company is not able to meaningfully quantify or estimate its additional purchase obligations in connection with research and development related to GF wafer production for 2012. In addition, the Company is not able to meaningfully quantify or estimate its purchase obligations to GF beyond 2012, but it expects that its future purchases from GF will continue to be material under the WSA.