Intel Corp (INTC)

[tatertot]

Elmer, from the Q1 AMD CC:


Serena Pajore – CLSA


Hey, Bob, just a question on gross margins. You said the factory utilization is impact in the gross margin both on a consolidated basis as well as for the Product Company. I’m just wondering, I was under the impression that the Product Company is more or less a [fabulous] company and I’m just wondering how the fixed cost is allocated between these two entities?

Robert J. Rivet

Well, think of it this way, I mean, you know, we’re in that early stage where the manufacturing assets that were in place are to build microprocessors because we’re the only customer. And what we cut I’ll call it in the initial stages of the deal is responsibility to manage costs and to manage the loading, and therefore also pay for that cost. So that’s why I kind of said that, you know, utilization does affect us. It’s not the extreme we’ve had with an OSAT or I’ll call it a typical foundry that a GPU has. So it’s a more tightly coupled relationship since we put in all that capacity, and we’re the only customer, and we kind of work our way through that. And manage the costs collectively with GLOBALFOUNDRIES and also pay for the costs.

Serena Pajore – CLSA

Okay. Thank you.

Robert J. Rivet

The utilization definitely impact us and we’re running pretty low rates and Dirk definitely would like to improve it.


So, initially, AMD is still on the hook.

ALSO:

http://www.eetasia.com/ART_8800574432_480200_NT_d248a243_2.HTM

In AMD's case, the company is bound by a 15-year agreement to source wafers from Globalfoundries through at least May 2024. That agreement can only be "terminated if a business plan deadlock exists," AMD said.