Foundry Capacity Agreement Dated August 12, 2003

EXHIBIT 10.1


CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been omitted pursuant to a request for confidential treatment and, where applicable, have been marked with an asterisk to denote where omissions have been made. The confidential material has been filed separately with the Commission.


LEXAR / UMC FOUNDRY CAPACITY AGREEMENT


This Foundry Capacity Agreement (" Agreement" ) is entered into as of August 12, 2003 (" the Effective Date" ) by and between Lexar Media, Inc. (" Lexar" or " Buyer" ) incorporated in Delaware, with offices at 47421 Bayside Parkway, Fremont, California 94538; and UMC Group (USA) (" UMC" or " Seller" ), with offices at 488 DeGuigne Drive, Sunnyvale, CA 94085.


1. DEFINITIONS


1.1 " Foundry Products" and/or " Products" shall mean those integrated circuits designed and/or licensed by Lexar, which UMC is to have manufactured for Lexar by UMC-affiliated fabs under this Foundry Capacity Agreement.

1.2 " UMC Production Capacity" and/or " Production Capacity" shall mean commercial production capacity in UMC' s facilities in quantities designated as 8-inch equivalent wafer starts during the month involved, manufactured using UMC' s 0.45um, Logic, 1P2M, 5V and/or 0.25um, Logic, 1P3M, 2.5V/5.0V, processes with no ESD Implant and non-EPI.


1.3 " Wafers" shall mean Products in unsorted, PCM tested wafer form.


2. FORECASTING AND COMMITMENTS


2.1 Forecasts . During the first seven calendar days of each calendar month, Lexar shall provide to UMC by facsimile or other electronic communication a written rolling forecast of its requirements for wafer-outs from UMC' s facilities for the next * (with the first month of each such forecast being the second calendar month following the month during which the forecast is received (each a " Buyer Forecast" ). By way of illustration, a Buyer Forecast provided on January 7 would forecast Lexar' s needs for wafer-outs during the period *. Each such Buyer Forecast shall show the quantity of wafer outs and the specific technology and/or process for the wafers listed, i.e., at a minimum, Logic, Mix-mode, SRAM, etc.; feature size (in microns); number of poly layers; number of metal layers; and metal type (collectively, " Technology" ). Lexar' s initial wafer and tapeout forecast and Projected 0.25um Product Roadmap for 2H Y2003 and 2004 is attached hereto as Exhibit A, which shall be deemed to be Lexar' s first Buyer Forecast.


2.2 Lexar shall make good faith efforts to ensure that all such Buyer Forecasts are reasonable estimates of its anticipated needs and UMC shall make good faith efforts meet the Buyer Forecasts and upside commitments in this section 2.0.

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2.3 Notwithstanding anything else, but for only so long as each Buyer Forecast, including any upside amounts, forecasts fewer than * wafer outs per month, for each and every month of such Buyer Forecast:


2.3.1 each Buyer Forecast, to the extent accepted by Seller, shall constitute a commitment by Lexar to purchase a minimum of the following percentages of the amounts indicated in such Buyer Forecast (by Technology) to the extent such Buyer Forecast is accepted by UMC:


Month in the forecast

*

*

* Minimum percentage commitment for amounts forecast for that month

*%

*%

*%


2.3.2 UMC will provide a written response to each Lexar forecast within ten business days of UMC' s receipt.


2.3.3 Production of Foundry Products shall be pursuant to purchase orders consistent with accepted Buyer Forecasts, or otherwise consistent with this Agreement. Subject to Sections 2.5 and 2.6 below and the other terms set forth in this Agreement, UMC' s response to each Buyer Forecast shall accept the quantities in each month of the Buyer Forecast to the extent they are * (for months in which up to * wafers have been forecast) or * (for months in which in excess of * wafers have been forecast) * for the applicable month(s) pursuant to a prior response to a Buyer Forecast. However, UMC may accept and/or reject in whole or in part any additional forecast quantities above the percentages specified above. To the extent that UMC accepts a Buyer Forecast in excess of the amounts specified above, UMC commits to sell the accepted quantities, subject to adjustments to be made in response to subsequent Buyer Forecasts consistent with this Agreement. UMC shall have no obligation to sell Products to Lexar except pursuant to purchase orders issued pursuant to accepted Buyer Forecasts.

2.4 In the event Buyer forecasts in excess of * wafers for any month, including upside, and notwithstanding anything else in this Agreement, no commitments from Seller in connection with such forecast, including but not limited to responses to such forecasts, shall be binding upon Seller, and Buyer and Seller, should it appear likely that Buyer' s forecasts shall exceed * wafers in any month, shall promptly renegotiate the table above.


2.5 To the extent that any Buyer Forecast fails to forecast the full capacity or quantity if any, allocated or promised to Lexar in response to a prior Buyer Forecast: (i) UMC shall be entitled in its sole and complete discretion to enter commitments with others for such unexercised capacity for the applicable months and in the amounts not so exercised, and (ii) Lexar will not have any right to require UMC to provide that unexercised capacity to Lexar in the month(s) involved.


2.6 In the absence of a written agreement to the contrary, capacity pursuant to this Agreement shall be generally linear, without abrupt changes from month to month and with no bunching or clumping of quantities or orders.


2.7 Subject to availability, to address engineering issues, and not to address production needs, and provided that Buyer provides adequate forecasting of its anticipated tapeouts requiring hot lot service, UMC shall make commercially reasonable efforts to provide access to hot lot services.

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been omitted pursuant to a request for confidential treatment and, where applicable, have been marked with an asterisk to denote where omissions have been made. The confidential material has been filed separately with the Commission.


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2.8 All capacity and pricing commitments made by UMC pursuant to this Agreement, any quotation issued during the term of this Agreement, and any response to any Buyer Forecast, are made in reliance upon Buyer * for the term of this Agreement and any extensions, and are voidable without liability by UMC upon Buyer failing to * for any calendar quarter. For purposes of this Agreement, UMC shall be considered to be * each quarter only if Buyer *. Buyer shall immediately inform UMC in the event that Buyer fails to * during any quarter during the term of this Agreement and any extension.

3. ORDERS AND PRODUCTION RELEASE .

3.1 Lexar shall issue purchase orders by the 15th day of each calendar month for wafer outs during the calendar month * months hence. By way of illustration, a purchase order is due by January 15th for wafer outs scheduled for *. All purch ...