Amd/tsmc Foundry Agreement

EXHIBIT 10.37


FOUNDRY AGREEMENT


BETWEEN


ADVANCED MICRO DEVICES, INC.


AND


TAIWAN SEMICONDUCTOR MANUFACTURING CORPORATION, LTD.


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


1. DEFINITIONS......................................................... 1


2. PROCESS TECHNOLOGY.................................................. 2


3. PRODUCTION.......................................................... 4


4. ON-SITE INSPECTION AND VENDOR INFORMATION........................... 5


5. TERM AND TERMINATION................................................ 6


6. CONFIDENTIAL INFORMATION............................................ 7


7. WARRANTY/ACCEPTANCE TESTING......................................... 7


8. PRICES/PAYMENT...................................................... 8


9. DELIVERY............................................................ 9


10. INDEMNIFICATION..................................................... 9


11. GENERAL............................................................. 10


EXHIBIT A (1.3) PRODUCTS................................................. 13


EXHIBIT B (1.4, 1.7, 1.8) QUALIFICATION REQUIREMENTS AND PLAN ........... 14


EXHIBIT C (1.9) RESERVED PRODUCTION CAPACITY............................. 16


EXHIBIT D (3.3) ACTUAL ORDERS............................................ 17


EXHIBIT E (8.1) PRICE TABLE.............................................. 18


AMD - TSMC


FOUNDRY AGREEMENT


THIS AGREEMENT (Agreement) is between Taiwan Semiconductor Manufacturing Corporation (TSMC), a Taiwanese corporation having its principal office at No. 121, Park Avenue 3, Science Based Industrial Park, Hsin-chu, Taiwan, and Advanced Micro Devices, Inc. (AMD), a Delaware U.S.A. corporation having its principal office at One AMD Place, Sunnyvale, California 94088-3453.


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


WHEREAS, TSMC has developed manufacturing processes, capabilities and foundry capabilities to produce silicon wafers based upon the operational criteria and process technology provided by others; and


WHEREAS, TSMC and AMD desire to enter into this Foundry Agreement for the manufacture by TSMC of microprocessor and other logic wafers containing AMD technology. IN CONSIDERATION of mutual promises in this Agreement, the parties agree as follows:


1. DEFINITIONS


1.1 "Die" means good silicon die produced according to the Qualification Requirements by TSMC for AMD using the Qualified Process. The Die are to be provided to AMD as Wafers with tested die.


1.2 "Wafer" means the six inch (6") diameter and eight inch (8") diameter wafers produced by TSMC for AMD using the Qualified Process. Where only six inch (6") or eight inch (8") wafers are referred to, they will be respectively specified as 6" or 8" Wafers.


1.3 "Products" means the different types of microprocessors or other logic to be produced from Die manufactured under this Agreement as set forth in Exhibit A (1.3) as amended from time to time by the mutual consent of the parties.


1.4 "Qualification Plan" means the steps to be taken to meet the objective reliability and quality specifications referred to as AMD Specification 00-021 as set forth in Exhibit B (1.4, 1.7, 1.8).


1.5 "Qualification" means the determination that the Die meet the Qualification Requirements in accordance with the Qualification Plan.


1.6 "Qualified Process" means the 0.5 micron or smaller AMD manufacturing process which will include AMD proprietary technology including, but not limited to, AMD's chemical mechanical polishing (CMP) process, with modifications made with the mutual agreement of the parties. The Qualified Process may be amended from time to time by the mutual consent of the parties.


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1.7 "Qualification Requirements" means the criteria and specification the die must pass to be accepted by AMD, as set forth in Exhibit B (1.4, 1.7, 1.8).


1.8 "Transfer Documentation" means the topographical design rules, parametric specifications, and process information for the Qualified Process, as set forth in Exhibit B (1.4, 1.7, 1.8).


1.9 "Reserved Production Capacity" means the maximum capability to produce Wafers which TSMC will allocate to AMD and guaranteed to produce at AMD's request as set forth in Exhibit C (1.9).


1.10 "Confidential Information" means the provisions of this Agreement and the previously transferred and to be transferred information related to Wafer production, Products and test under this Agreement including all exhibits, and information including but not limited to technical information, database tapes, specifications, test tapes, masks and supporting documentation provided either orally, in writing, or in machine readable format and masks or reticles generated by or for TSMC using AMD database tapes; provided that all such information other than masks or reticles, is marked "Confidential" or similarly, or, if oral, identified as confidential at the time of disclosure and described in writing within thirty (30) days thereafter. Notwithstanding the foregoing, Confidential Information does not include information generally available to the public, information independently developed or known by the receiving party without reference to information disclosed hereunder, information rightfully received from a third party without confidentiality obligations, or information authorized in writing for release by the disclosing party hereunder.


2. PROCESS TECHNOLOGY


2.1 AMD will transfer to TSMC for the Qualified Process [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] as more fully described in the Transfer [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]


2.2 TSMC agrees that it will manufacture exclusively for AMD [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] or smaller devices which are capable of running an [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] or [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] compatible instruction set for a period beginning on the Effective Date and ending on [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]. This manufacturing exclusivity, however, does not apply to any manufacturing activity where TSMC uses its own process that does not include AMD's CMP process or any other AMD proprietary technology.


2.3 AMD grants to TSMC a personal, nonexclusive, irrevocable, nontransferable, right and license, without the right to grant sublicenses to third parties, to use the Qualified Process


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relevant process information to make, use, and sell products of third parties except as provided in Section 2.2.


2.4 AMD will provide the initial mask set for each version or the initial mask for the mask set for each revision requested by AMD of each Product. TSMC will provide any subsequent mask set for each version or any mask set for each revision requested by TSMC. Such mask sets or variations thereof shall only be used for AMD.


2.5 Upon mutual agreement of the parties, production may be started prior to completion of full Qualification.


2.6 Die delivered for Qualification must meet all Qualification Requirements as set forth in Exhibits B (1.4, 1.7, 1.8). Quarterly progress reports will be provided by TSMC on its progress towards Qualification of the Qualified Process.


2.6.1 If TSMC successfully completes Qualification, then, upon written notice from AMD of successful completion, TSMC will proceed to manufacture and deliver Die at a rate which is agreed upon by TSMC and AMD in accordance with Section 3.2.


2.6.2 If TSMC fails Qualification, such failure shall not be considered a breach of this Agreement, and:


2.6.2.1 If TSMC is at fault or neither party is at fault, TSMC shall provide AMD with new Die at TSMC's expense within sixty (60) days after notification in writing by AMD of TSMC's failure to pass Qualification and shall repeat the process of Section 2.6 until TSMC successfully completes Qualification or AMD notifies TSMC it is terminating this Agreement after at least two unsuccessful attempts at Qualification which are the fault of TSMC. If AMD terminates this Agreement under this Section 2.6.2.1, the manufacturing exclusivity under Section 2.2 shall continue until [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION], and the license to TSMC under Section 2.3 shall be suspended until [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION].


2.6.2.2 If AMD is at fault, TSMC shall provide AMD with new Die at AMD's request and expense within sixty (60) days after notification in writing by AMD of TSMC's failure to pass Qualification and shall repeat the process of Section 2.6 until TSMC successfully completes Qualification or either party notifies the other it is terminating this Agreement after at least two unsuccessful attempts at Qualification which are the fault of AMD. If this Agreement is terminated under this Section 2.6.2.2, the manufacturing exclusivity under Section 2.2 shall continue until [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION], but the license to TSMC under Section 2.3 shall continue unabated.


2.6.3 The target date for completion of Qualification is June 31, 1995. TSMC will make its best effort to complete Qualification by August 31, 1995. Time is of the essence for AMD so that, if TSMC fails to complete Qualification by October 31, 1995, and AMD is not at fault, the


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purchase minimum of Section 3.2.2 will be reduced to levels determined by AMD upon notice from AMD or this Agreement shall immediately terminate upon notice from AMD with no further opportunity for TSMC to complete Qualification. If AMD terminates this Agreement under this Section 2.6.3, the manufacturing exclusivity under Section 2.2 shall continue until [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION], and the license to TSMC under Section 2.3 shall be suspended until [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION].


2.7 Before Qualification, TSMC and AMD will agree upon parametric and process flow specifications which will be finalized before TSMC begins production. TSMC will not modify agreed upon specifications or routine process control steps in any way without the prior written consent of AMD.


2.8 TSMC agrees that it will transfer the 0.5 micron Qualified Process to the 8" wafer production line currently under construction in a timely fashion. AMD will provide reasonable support for the transfer.


3. PRODUCTION


3.1 Using the Qualified Process, TSMC will manufacture the Products as Wafers with tested Die.


3.2 As soon as a process becomes a Qualified Process:


3.2.1 TSMC will reserve for AMD the Reserved Production Capacity on the Qualified Process.


3.2.1.1 The initial Reserved Production Capacity will become
firm only when the Products are released for production
and will ramp up as follows:


Month After Release Rate (Wafers/Week)
------------------- ------------------


1st [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION]
2nd [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION]
3rd [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION]


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3.2.1.2 Except for the production increases agreed to and provided for in Exhibit C (1.9) Reserved Production Capacity, any requested increase in production volumes by AMD shall be no more than [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] Wafers/week in any ninety (90) day period upon ninety (90) days notice from AMD up to the Reserved Production Capacity unless otherwise agreed to by TSMC.


3.2.2 AMD will purchase a minimum number of Wafers/week equal to [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] percent ([CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] %) of TSMC's Reserved Production Capacity specified in the above Section 3.2.1 and in Exhibit C (1.9), provided: (i) the yield of Die per Wafer is at least [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] percent ([CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] % ); and (ii) the Product can be sold with [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] . If requested by TSMC, AMD will provide reasonable and sufficient evidence of its [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] for the Product to the extent it is permitted to do so if the [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] given in 3.2.2 (ii).


3.2.3 If the Die cannot be sold to AMD to produce a [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] greater than provided in Section 3.2.2 for a particular Product and TSMC cannot thenceforward [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of such Die to AMD to meet AMD's [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION], the number of Wafers allocated to such Product shall thenceforward be subtracted from the minimum. If particular Wafers are rejected, the minimum is reduced by the number of rejected Wafers. If TSMC does not produce the number of Wafers allocated to a particular Product type, the minimum is reduced by that amount.


3.3 Actual orders shall be provided to TSMC by AMD as outlined in Exhibit D (3.3).


3.4 TSMC will purchase testing equipment (Testers) to meet AMD forecast demands. If the Testers are not used for three (3) months and there is not forecast use for the next three (3) months, at TSMC's written request, AMD shall purchase the Testers from TSMC for their depreciated value.


3.5 If AMD determines that modifications to the Products or the Qualification Requirements are required, including modifications to mask tooling, process or testing, TSMC agrees to make such modifications within a reasonable period of time after notification in writing by AMD. The


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parties will negotiate and mutually agree upon any adjustments to the price and delivery schedules as well as charges for retooling costs if warranted by such modifications.


3.6 If Die fail to meet the Qualification Requirements, and in AMD's reasonable opinion such failure appears mater ...