Dec/amd Foundry Agreement

EXHIBIT 10.36


FOUNDRY AGREEMENT


BETWEEN


DIGITAL EQUIPMENT CORPORATION


AND


ADVANCED MICRO DEVICES, INC.


CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT.


TABLE OF CONTENTS SECTION 1 - DEFINITIONS..................................................... 1 SECTION 2 - NATURE OF THIS AGREEMENT........................................ 3 SECTION 3 - DEVELOPMENT PROCEDURE........................................... 4 SECTION 4 - DEVICE QUALIFICATION............................................ 5 SECTION 5 - PRODUCTION...................................................... 6 SECTION 6 - OWNERSHIP AND LICENSES.......................................... 8 SECTION 7 - MASK WORKS RIGHTS............................................... 9 SECTION 8 - PURCHASE ORDERS AND FORECASTS................................... 9 SECTION 9 - PAYMENT......................................................... 10 SECTION 10 - DELIVERY AND ACCEPTANCE........................................ 11 SECTION 11 - TERM AND TERMINATION........................................... 12 SECTION 12 - WARRANTY AND INDEMNITY......................................... 13 SECTION 13 - CONFIDENTIALITY................................................ 15 SECTION 14 - FORCE MAJEURE.................................................. 17 SECTION 15 - PARTIAL INVALIDITY............................................. 17 SECTION 16 - NOTICES........................................................ 17 SECTION 17 - NON-WAIVER..................................................... 18 SECTION 18 - NON-ASSIGNABILITY/TRANSFERABILITY.............................. 19 SECTION 19 - SECTION HEADINGS............................................... 19 SECTION 20 - GOVERNING LAW.................................................. 19 SECTION 21 - PUBLICITY...................................................... 19 SECTION 22 - ENTIRE AGREEMENT............................................... 19 SECTION 23 - LIMITATION OF LIABILITY........................................ 19 EXHIBIT A DEVICES AND DEVICE SPECIFICATIONS................................ 21 EXHIBIT B SECTION 1: DEVICE TRANSFER AND QUALIFICATION PLAN
SECTION 2: DEVICE TECHNOLOGY PACKAGE............................ 22 EXHIBIT C QUALIFIED PROCESS(ES) SPECIFICATION
PRODUCT QUALIFICATION SPECIFICATION.............................. 23 EXHIBIT D WAFER ACCEPTANCE CRITERIA........................................ 24 EXHIBIT E PAYMENT CALCULATION.............................................. 26 EXHIBIT F [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION]...................................................... 28


DEC-AMD


FOUNDRY AGREEMENT


This Foundry Agreement, together with the Exhibits referenced herein and attached hereto ("Agreement") is between Digital Equipment Corporation, a Massachusetts corporation having a principal place of business of 146 Main Street, Maynard, Massachusetts, 01754 and all of its majority owned subsidiaries ("DIGITAL") and Advanced Micro Devices, Inc., a Delaware corporation having a principal place of business at 901 Thompson Place, P.O. Box 3453, Sunnyvale, California, 94088-3453 and all of its majority owned subsidiaries ("AMD").


WHEREAS, AMD has developed certain technology relating to microprocessors; and


WHEREAS, DIGITAL is, among other things, in the business of designing, developing, manufacturing and selling computer systems and associated software, and components thereof, including semiconductor integrated circuits; and


WHEREAS, DIGITAL has also developed manufacturing processes, capabilities and foundry capabilities to produce silicon wafers containing integrated circuit die for microprocessors designed and laid out by other parties, such as AMD; and


WHEREAS, DIGITAL and AMD desire to enter into this Agreement for the manufacture by DIGITAL of microprocessor wafers containing AMD microprocessor technology for AMD;


IN CONSIDERATION of the mutual promises in this Agreement, the parties agree as follows:


SECTION 1 - DEFINITIONS


As used in this Agreement, the following terms shall have the meanings set forth below:


1.1 DEVICE shall mean a fully qualified, semiconductor integrated circuit, embodying a specific unique design provided to DIGITAL by AMD which corresponds to an AMD microprocessor product and which has successfully completed Product Qualification. The different types and speed classes of microprocessors to be produced under this Agreement are set forth in Exhibit A as amended from time to time.


1.2 INTELLECTUAL PROPERTY RIGHTS shall mean all PATENTS, TRADE SECRETS, COPYRIGHTS, MASK WORKS RIGHTS AND KNOW-HOW which have been, or will be, acquired or otherwise secured by either party before or during the TERM of this Agreement, throughout the world:


1.2.1 PATENTS shall mean all right, title and interest in and to all Letters Patent and applications for Letters Patent, Industrial Models, Industrial Designs, Petty Patents, Patents of Importation, Utility Models, Certificates of Invention, and other indicia of invention ownership, including any such rights granted upon any reissue, division, continuation or continuation-in-part applications now or hereafter filed; and


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1.2.2 TRADE SECRETS shall mean all right, title and interest in and to all trade secret rights arising under the common law, state law, federal law or the laws of any foreign country; and


1.2.3 MASK WORKS RIGHTS shall mean all right, title and interest in and to all MASK WORKS as MASK WORKS are defined in Section 901(a) (2) of the Semiconductor Chip Protection Act of 1984.


1.2.4 COPYRIGHT RIGHTS shall mean all right, title and interest in and to all copyright rights and all other literary property and author rights; and


1.2.5 KNOW-HOW shall mean all right, title and interest in and to all know-how and show-how.


1.3 LOT shall mean twenty four (24) WAFER starts.


1.4 WAFER shall mean the six inch (6") diameter or six inch (6") diameter equivalent silicon wafers produced by DIGITAL for AMD.


1.5 QUALIFIED PROCESS(ES) shall mean DIGITAL's CMOS process(es), with modification, if any, made by DIGITAL with the mutual agreement of the parties, which has been demonstrated to meet the objective reliability and quality specifications referred to as AMD process qualification specification as set forth in Exhibit C.


1.6 PRODUCT QUALIFICATION shall mean the determination that DEVICES manufactured in the QUALIFIED PROCESS(ES) meet the objective criteria and specification for the DEVICE as specified in AMD's PRODUCT QUALIFICATION specification set forth in Exhibit C.


1.7 MASK WORK shall mean any mask set or work created and produced by or for DIGITAL and utilized in the fabrication of a DEVICE, and shall include both physical mask works, e.g., reticles, and any electronic form of a mask work, originally created by DIGITAL from information, data bases or the like provided by AMD to DIGITAL in the TECHNOLOGY PACKAGE.


1.8 AMD DEVICE SPECIFICATION shall mean the document which shall define the specific function, electrical, timing, mechanical, environmental, reliability and other requirements of a DEVICE.


1.9 TERM shall mean the period of time during which this Agreement is in effect. Such period shall commence upon the execution of this Agreement by both parties.


1.10 SEMICONDUCTOR CHIP PROTECTION LAW(S) shall mean the Semiconductor Chip Protection Act of 1984 in the United States and any associated regulations and any amendments or revisions to such law or regulations, or any corresponding law and regulations in a country other than the United States.


1.11 PREQUALIFICATION DEVICE shall mean a DEVICE produced by DIGITAL on the line upon which it intends to produce the DEVICE, but prior to final qualification of


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the DEVICE. A PREQUALIFICATION DEVICE must meet all of the requirements of the applicable requirements of the applicable AMD GENERAL SPECIFICATION, with the exception of environmental and reliability requirements and other requirements which are being tested during qualification.


1.12 TECHNOLOGY PACKAGE shall mean (i) layout design data bases utilized for the creation of a DEVICE, (ii) DEVICE specific test programs/patterns for wafer functional and electrical test, (iii) DEVICE specific electrical and probe information, and (iv) logic/circuit schematics as the parties shall agree are necessary for DIGITAL to convert layout designs for fabrication in the QUALIFIED PROCESS(ES) and/or to complete any agreed upon design modifications, or alternatively a mechanism to verify electrical and logical correctness of the data base conversion and/or design modifications.


1.13 CONFIDENTIAL INFORMATION shall mean the confidential and proprietary information of either party marked as such and treated in accordance with the provisions of Section 13, CONFIDENTIAL INFORMATION.


1.14 PROTOTYPE shall mean a preliminary form of a DEVICE which is fabricated for the purpose of functional and electrical verification. A PROTOTYPE is not warranted for other than workmanship.


1.15 [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] .


SECTION 2 - NATURE OF THIS AGREEMENT


2.1 This Agreement shall constitute the basic terms and conditions which can be used for the production of multiple DEVICES.


2.2 For each DEVICE transaction, as may occur, the parties will separately negotiate the schedules, terms, conditions, development processes and the like of an Exhibit A, an Exhibit B, and an Exhibit C, as appropriate. Each such Exhibit A, Exhibit B, and Exhibit C, as appropriate, shall, become amendments to this Agreement.


SECTION 3 - DEVELOPMENT PROCEDURE


3.1 DIGITAL, with such participation and cooperation from AMD as the parties shall agree is appropriate, and as set forth in the pertinent Exhibit B, shall produce an electronic data base from which physical MASK WORKS (reticles) for its fabrication process, can be produced, and shall produce or have produced on AMD's behalf such physical MASK WORKS (reticles). The process for DIGITAL to produce such MASK WORKS (and for AMD's participation in such process, if any) from the information in the TECHNOLOGY PACKAGE for a given DEVICE shall be defined in its appropriate Exhibit B. Exhibit B for each DEVICE shall define, (1) the specific elements of the TECHNOLOGY PACKAGE needed to be provided by AMD to DIGITAL, or access to the results of the utilization of which are needed to be provided by AMD to DIGITAL, to convert an AMD DEVICE electronic layout design data base to DIGITAL's fabrication process design rules and parameters, and fabricate PROTOTYPES and


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PREQUALIFICATION DEVICES and DEVICES, (2) a set of Milestone events in the DIGITAL layout design development process, with assignments for which party or parties will be responsible for what steps in achieving each Milestone, (3) an indication of where such work will occur, and (4) the projected completion dates for each Milestone.


3.2 As proof of capability, DIGITAL will manufacture one LOT of each DEVICE using the process described in Exhibit B at a fee of [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] on an expedited hot lot basis after AMD provides DIGITAL with the TECHNOLOGY PACKAGE. The LOT will be considered a noncommercial PROTOTYPE order.


3.2.1 AMD will inspect and test PROTOTYPES in accordance with a test program as part of the development process outlined in Exhibit B. AMD will provide DIGITAL with the results of such inspection and testing in writing, accepting or rejecting the PROTOTYPES within thirty (30) days after receipt of the PROTOTYPES by AMD. This PROTOTYPE development process will be repeated until AMD provides DIGITAL with approval of the PROTOTYPE or terminates development of the DEVICE corresponding to the PROTOTYPE because the parties determine that the DEVICE cannot be effectively produced on fabrication process.


3.3 DIGITAL shall modify DIGITAL's semiconductor fabrication process as necessary to enable DIGITAL to fabricate DEVICES, which meet the AMD specifications for such DEVICES.


3.4 DIGITAL shall provide specific design engineering services to incorporate [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] . AMD shall pay DIGITAL [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] within thirty (30) days of completion [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] and delivery of a copy of the [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] to AMD.


3.4.1 DIGITAL acknowledges that as between DIGITAL and AMD, AMD owns
and shall retain all right, title and interest in and to all
INTELLECTUAL PROPERTY RIGHTS in and to the [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] upon which DIGITAL will incorporate
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] .


3.4.2 AMD acknowledges that as between DIGITAL and AMD, DIGITAL owns
and shall retain all right, title and interest in and to all
INTELLECTUAL PROPERTY RIGHTS in and to [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION].


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3.5 AMD will provide to DIGITAL such test programs and patterns, as shall be agreed upon by the parties are needed by DIGITAL to produce DEVICES, and as shall be listed in Exhibit B as part of the TECHNOLOGY PACKAGE.


3.6 While an employee of one party is on the premises of the other party in order to perform its obligations under this Agreement, such employee shall obey all reasonable personnel, safety and security policies and procedures of the other party. Each party hereby indemnifies and holds harmless the other party for any loss, damage or other award, arising from any suit, claim or cause of action resulting from any injury or harm, including loss of life, to such employee of the other party, other than that resulting from the gross negligence or willful or wanton act of any employee, officer, director, agent or other representative of the other party.


SECTION 4 - DEVICE QUALIFICATION


4.1 DIGITAL and AMD will agree upon a qualification plan for each DEVICE to be manufactured pursuant to this Agreement, and incorporated in Exhibit B, clearly specifying which party will be responsible for each part of the qualification plan. Such plan will be shown in Exhibit B and will address both QUALIFIED PROCESS(ES) and PRODUCT QUALIFICATION.


4.2 Qualification tests shall be performed in accordance with the qualification specifications as mutually agreed upon by the parties and as set forth in Exhibit C. AMD will notify DIGITAL in writing of such QUALIFIED PROCESS(ES) and PRODUCT QUALIFICATION or failure of such for each specific DEVICE. In case of failure of qualification, AMD shall notify DIGITAL in writing specifying the reasons for the failure of qualification of the specific DEVICE, and both parties shall faithfully cooperate in order to resolve problems causing the failure of qualification. AMD shall pay for one initial MASK WORKS and any sets required due to changes required by AMD. Any other MASK WORKS will be paid for by DIGITAL.


4.3 Upon acceptance by AMD of a DEVICE PROTOTYPE, DIGITAL shall run, upon request by AMD, a mutually agreed upon number of qualification engineering LOTS using the same reticle set as the accepted PROTOTYPE at a fee of [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] per LOT. Any qualification engineering LOTS using reticle sets incorporating any design modifications will also be run at a fee of [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] per LOT.


4.4 Prior to PRODUCT QUALIFICATION, AMD may stop production for any or all AMD DEVICES by providing written notice to DIGITAL. DIGITAL will stop production following completion of the process steps at which the appropriate WAFERS reside at the time of written notification. As long as the production is stopped at AMD's request, through no fault of DIGITAL, AMD will pay DIGITAL for all such WAFERS started prior to DIGITAL receiving the written notice. Prices for such work in progress (WIP) WAFERS will be prorated based on the stage of production, but in no event shall the price exceed the completed price as stated in the Section covering price. Upon payment, the WIP WAFERS will be delivered to AMD. The parties will work together to


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determine the best course of stopping production in accordance with good manufacturing practice to prevent waste.


4.5 As part of the PRODUCT QUALIFICATION, DIGITAL and AMD shall agree upon parametric and process flow specifications prior to the production of DEVICES. DIGITAL will not modify the agreed upon specifications or routine process control steps without the prior written consent of AMD.


4.6 After approval of a PROTOTYPE, but before full qualification of the corresponding DEVICE, AMD may order from DIGITAL PREQUALIFICATION DEVICES, in anticipation of successful qualification of such DEVICE. Such orders shall be effected by a Purchase Order, which denominates the DEVICES being ordered as PREQUALIFICATION DEVICES.


SECTION 5 - PRODUCTION


5.1 DIGITAL will manufacture the DEVICES as WAFERS with tested die.


5.2 Upon successful completion of PRODUCT QUALIFICATION:


5.2.1 As part of the production ramp up, DIGITAL shall reserve for AMD a QUALIFIED PROCESS production capacity of at least the following DEVICE WAFER outs per week:


2Q94 3Q94 4Q94 1Q95 After 1Q95
---- ---- ---- ---- ----------


[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]


5.2.2 Upon the achievement of [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] WAFER outs per week as stated in Section 5.2.1 above, DIGITAL shall reserve for AMD a QUALIFIED PROCESS production capacity so as to be able to provide AMD with at least the following minimum good DEVICE die outs per year:


5.2.2.1 [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] good DEVICE
die outs per year using the initial Mask Works; or


5.2.2.2 The equivalent to [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] good DEVICE die outs per year as indicated by
a change in the die size and defect density using Mask
Works after the initial Mask Works.


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5.2.3 AMD agrees to purchase, at a minimum, a number of WAFERS per week equal to [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of the manufacturing capacity reserved in Section 5.2.1 above provided the Acceptance Criteria of Exhibit D are met.


5.3 In the event AMD reduces its purchases to a level below that of Section 5.2.2, DIGITAL may reduce its reservation of manufacturing capacity to a level proportionate to the AMD purchase level. The purchase level shall be evaluated on a monthly basis. If, during any sixty (60) day period AMD does not purchase, on an average, at least [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] WAFERS per week, DIGITAL has the option to terminate this Agreement.


5.4 If die fail to meet parametric specifications, and in AMD's reasonable opinion such failure is deemed material, AMD may request that DIGITAL stop production. If DIGITAL is unable to correct such failures with ...