AMD to GlobalFoundries: No More Money for Defective Chips

Paul Lilly

Nobody wants to pay for something that doesn't work, and the same holds true for big corporations, like AMD. No longer willing to accept non-working parts, AMD hammered out a new deal with GlobalFoundries in which it will only pay for chips that that work as advertised. Prior to this revised agreement, AMD was paying for all chips produced at cost plus a markup for GlobalFoundries, and it didn't matter whether the chips worked or not.

According to news and rumor site Fudzilla , AMD's toughened stance is to serve as an incentive for GlobalFoundries to improve production of 32nm chips. It's unclear how many defective parts AMD paid for up to this point.

AMD reckons it will pay GlobalFoundries in the neighborhood of $1.1 billion to $1.5 billion in 2011 and $1.5 billion to $1.9 billion in 2012. AMD, which is GlobalFoundries' biggest customers, paid around $1.2 billion in 2010.

Image Credit: GlobalFoundries

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