Why was Ahmed Yahia Al Idrissi appointed to AMD's Board?

Ahmed Yahia Al Idrissi was appointed as a director to AMD's Board, effective November 7, 2012. His appointment is notable because he is an Executive Director of Mubadala Industry, an entity affiliated with ATIC and West Coast Hitech (WCH), which is AMD's largest stockholder. This appointment signifies a continued relationship and potential oversight from key stakeholders.

What is the impact of the Wafer Supply Agreement (WSA) amendments on AMD's relationship with GLOBALFOUNDRIES (GF)?

The second amendment to the WSA, effective March 4, 2012, fundamentally altered AMD's relationship with GF. AMD transferred all its capital stock in GF, ceasing to be an owner or partner. Consequently, AMD lost its right to board representation at GF. While AMD is no longer an owner, it remains a significant customer, with substantial wafer purchase obligations to GF expected to continue.

What financial impact did the changes with GF have on AMD?

The changes related to the transfer of AMD's ownership in GF resulted in a significant one-time charge of $703 million recorded in the first quarter of 2012. This charge comprised a $425 million cash payment made to GF and a $278 million non-cash charge representing the carrying and fair value of the transferred capital stock.

What are AMD's future obligations to GF?

AMD expects its future purchases from GF to remain material. While specific pricing for 2013 is still under negotiation, the company estimated that it would pay GF approximately $1.5 billion in 2012 for wafer purchases and $56 million for related R&D services. The company anticipates continued significant expenditure for wafer manufacturing services.

AMD 8-K: Leadership Changes

Summary

Advanced Micro Devices, Inc. (AMD) filed an 8-K on November 7, 2012, primarily reporting the appointment of Ahmed Yahia Al Idrissi to its Board of Directors. Mr. Al Idrissi's appointment is significant as he represents interests affiliated with ATIC and Mubadala, AMD's largest stockholder, which also owns GLOBALFOUNDRIES (GF), a key foundry supplier to AMD. The filing also provides crucial updates regarding AMD's relationship with GF, detailing amendments to their Master Transaction Agreement, Shareholders' Agreement, Funding Agreement, and importantly, the Wafer Supply Agreement (WSA). A significant development is the second amendment to the WSA, effective March 4, 2012, which resulted in AMD relinquishing its ownership stake in GF and no longer being a party to the Funding Agreement. This move also led to AMD losing its board representation at GF. The company recorded a substantial one-time charge of $703 million in Q1 2012 related to these changes, including a $425 million cash payment and the transfer of its GF capital stock. AMD continues to be a major customer of GF, with significant wafer purchase obligations expected to remain material in the future, although specific 2013 terms are still under negotiation.

Key Highlights

1Ahmed Yahia Al Idrissi appointed to AMD's Board of Directors, effective November 7, 2012.
2Mr. Al Idrissi is affiliated with Mubadala entities, which include ATIC and WCH, AMD's largest stockholder.
3AMD transferred its ownership stake in GLOBALFOUNDRIES (GF) to GF as part of amendments to the Wafer Supply Agreement (WSA).
4AMD is no longer an owner or tax partner of GF and has lost its board representation at GF.
5A one-time charge of $703 million was recorded in Q1 2012 related to the GF ownership transfer and related payments.
6AMD paid $425 million in cash and transferred GF capital stock, with remaining payments due by December 31, 2012.
7AMD anticipates significant, material wafer purchase obligations with GF beyond 2012, with negotiations for 2013 pricing ongoing.

ADVANCED MICRO DEVICES INC 8-K Report, Executive Changes (Nov 8, 2012)

Summary

Key Highlights

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