Wafer Foundry Agreement

Exhibit 10.12

[***] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


Master

WAFER FOUNDRY AGREEMENT


THIS WAFER FOUNDRY AGREEMENT is made effective as of the 4 TH day of JUNE, 2002, by and among the Systems I.C. Division of HYNIX SEMICONDUCTOR AMERICA , a California corporation, located at 3101 North First Street, San Jose, California 95134 hereinafter (" HSA" ) functioning as the contract facilitator and limited agent of HSI, and HYNIX SEMICONDUCTOR INC., LTD. (" HSI" ) a Republic of Korea corporation with its principal offices located at San 136-1, Ami-ri, Bubal-eub, Ichon-si, KyoungKi-do, 467-701 Korea, performing as the FOUNDRY, and ADVANCED ANALOGIC TECHNOLOGIES, INC., a California corporation, located at 1250 Oakmead Parkway Suite 310, Sunnyvale, CA 94086, hereinafter (" CUSTOMER" ).


RECITALS


WHEREAS, (CUSTOMER) desires to establish a source for supply of fabricated and / or unprobed wafers and / or probed wafers and / or packaged and tested units; and

WHEREAS, (CUSTOMER) has created certain design parameters and specifications for its semiconductor wafer requirements; and

WHEREAS, HSI as a semiconductor wafer fabrication business has manufacturing capabilities to assist and does desire to assist CUSTOMER in transitioning CUSTOMER' s designs and specifications into fabricated semiconductor wafers; and


WHEREAS, HSA is HSI' s contract facilitator and limited agent to coordinate communications and sales between HSI and CUSTOMER; and

WHEREAS, upon acceptable completion of the development and productization phases of CUSTOMER' s semiconductor wafer designs to enable manufacturing (" Fabrication" ), CUSTOMER and HSI desire that HSI shall fabricate and deliver production quantities of unprobed wafers, probed wafers and / or packaged and tested units in accordance with this Agreement and the Exhibits incorporated herein;


NOW, THEREFORE , in consideration of these premises, the terms and conditions and exhibits contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS


Section 1.0. Where set forth in this Agreement, the following terms shall have the meanings as defined in this Section:


" Design Specifications" shall mean the specifications, test vectors, GDSII or MEBES databases and other design parameters and guidelines provided by CUSTOMER to the FOUNDRY as more fully set forth in Exhibit B (Parametric and Other Specifications) , which Exhibit is attached hereto and incorporated herein and all of which shall be of adequate detail and specificity to enable the FOUNDRY to generate other tools, mask sets and other items as customarily necessary to prepare the product for production.


" Effective Date" shall mean the effective date of this Agreement which shall be the date first above written.


" Exhibit" or " Exhibits" shall mean any and all exhibits to this Agreement, which by this reference are incorporated into and made a part hereof.


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" Foundry" shall mean, unless otherwise mutually agreed to in writing by the parties, Hynix Semiconductor Inc., a corporation of the Republic of Korea.


" Intellectual Property (IP)" shall mean, custom design blocks developed by HSI and provided to customer for the propagation of his design and intended for Production at FOUNDRY.

" Library" shall mean the Foundry supplied libraries and design kits provided to CUSTOMER for the design of Product.

" Products" shall mean the semiconductor wafers and / or finished turnkey units to be manufactured under this Agreement as more fully described in the Exhibits hereto.


" Production" shall mean the volume Fabrication of Products as semiconductor wafers following a written, formal Acceptance and Release For Production by CUSTOMER to HSI and pursuant to a written Volume Purchase Agreement.


" Production Lot" shall mean a total of 25 8 inch wafers and / or 50, 6 inch wafers, processed together at FOUNDRY.


" Prototype Lot" shall mean a total of 25 wafers or less processed with special engineering instructions provided by CUSTOMER or FOUNDRY.

" Proprietary Information" shall mean any and all designs, technical, scientific, marketing or business information or data, engineering know-how, trade secrets, drawings, artwork, documentation, circuitry, processes, illustrations, mask work, and any other information, whether or not copyrightable or patentable, of any party to this Agreement which is deemed by such party to be confidential and/or proprietary, including any such Proprietary Information which may be developed by the parties in the future.


" Risk Production" shall mean the fabrication of Products, prior to formal acceptance of the production units.

" Target Yield" shall mean an average number of good Products resulting from production wafers agreed to by CUSTOMER and FOUNDRY.

" Turn Key" shall mean the complete fabrication process which includes, wafer fabrication, wafer probing, packaging and testing of Products.


" Wafers" shall mean the silicon discs of varying sizes to be processed by FOUNDRY into semiconductor wafers in accordance with the information supplied by CUSTOMER as specified in Exhibit B .

ARTICLE II

DESCRIPTION OF WORK


Section 2.0. Agreement to Undertake and Perform Fabrication. FOUNDRY hereby agrees to perform the Fabrication requested by CUSTOMER in accordance with the Design Specifications set forth in Exhibit B and the Development and Fabrication Schedules set forth in Exhibit A (Scheduling, Quantities and Prices) which is attached hereto and incorporated herein. CUSTOMER hereby acknowledges and agrees that such manufacturing work may be requested through HSA and be performed by HSI functioning as the FOUNDRY as above defined. In consideration for the performance of such wafer manufacturing work, CUSTOMER agrees to pay through HSA all of the FOUNDRY non-recurring engineering charges (" NRE" ) and other charges at the rates set forth in Exhibit A in accordance with the schedule set forth therein for the specified quantities.


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Section 2.1. Support . CUSTOMER will in a timely manner against the Development Schedule, provide HSA and the FOUNDRY with such documentation, specifications and additional engineering support as may be reasonably necessary for the FOUNDRY to complete the productization of the Product in preparation for beginning Production.

Section 2.2. Changes . CUSTOMER shall promptly notify HSA and FOUNDRY in writing of any requested additions and desired Exhibit B amendments. If any such addition, deletion or change shall require an adjustment in any schedule for the Design Work or processes that may not be compatible with those of FOUNDRY, any such requested additions or changes are subject to written acceptance by HSA and FOUNDRY and when accepted, such schedule or Exhibit will also be adjusted according to written changes to the Design Specifications which may become necessary or desirable with respect to a Product. CUSTOMER will pay any additional charges resulting from any such addition or change.


Section 2.3. Simulations. CUSTOMER shall perform the pre-layout simulation and post-layout simulation and release to HSA for delivery to FOUNDRY, a GDSII formatted data base tape conforming to FOUNDRY process design rules and which is subject to acceptance by FOUNDRY. FOUNDRY shall perform design rule checks (" DRC" ) on the CUSTOMER database. Should the CUSTOMER database have design rule (DRC) errors, those errors shall be reported in writing and the data base tape shall be returned to CUSTOMER for correction. Upon completion of an error free design rules check, written authorization of the CUSTOMER and the written acceptance of HSA and FOUNDRY, FOUNDRY shall release the data base for fabrication of Prototypes.


ARTICLE III PROTOTYPE UNITS

Section 3.1. Nonrecurring Engineering Charges (" NRE" ). CUSTOMER agrees to pay to HSA for the work performed during the first iteration, described in Section 3.2, the nonrecurring engineering charges as set forth in Exhibit A . The NRE includes engineering work for unprobed wafers or blind build units as previously agreed to by CUSTOMER and FOUNDRY.

Section 3.2. Prototype, First Iteration . CUSTOMER shall supply an RTL or GDS database, as set forth in EXHIBIT B, to the FOUNDRY for fabrication of the Product. FOUNDRY shall fabricate unprobed prototype wafers or blind build units of the Product as set forth in Exhibit B.


CUSTOMER may subcontract mask making to HSA and FOUNDRY, or HSA may subcontract photomask making to a designated subcontractor. In any case, the expense, responsibility and ownership of and for the masks remain CUSTOMER' s. If an HSA and FOUNDRY designated photomask subcontractor is used, the subcontractor shall be subject to the non-disclosure terms at least as restrictive as stated herein and be subject to the written consent of CUSTOMER and HSA, and FOUNDRY.


CUSTOMER shall have a period of thirty (30) days to inspect the EXHIBIT B Prototypes. Within such thirty (30) day period, CUSTOMER shall provide HSA and FOUNDRY with a written notice of its acceptance or rejection of the Prototypes. The notice to be provided by CUSTOMER, if a rejection, shall set forth in sufficient and specific detail the reasons for rejection, and such notice shall be accompanied by the return of all of the Prototypes. If written notice of rejection or a request for additional evaluation time, not to exceed ten (10) business days, is not received by HSA and FOUNDRY within such thirty (30) day period, then the Prototypes are here agreed to have been accepted by CUSTOMER

Upon receipt by HSA of the Prototypes and a notice from CUSTOMER rejecting the Prototypes, HSA and FOUNDRY shall evaluate the reasons for the rejection and inspect the Prototypes.


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If the reasons for rejection are due to a nonconformity of the Prototypes to the PCM data set out in Exhibit B, or are due to a nonconformity of the Prototypes of the post-simulation layout, then Foundry shall accept responsibility and correct any such nonconformity at its expense.


In all other cases the Prototypes are here agreed to have been accepted and CUSTOMER shall accept responsibility for the rejection and pay the balance of the nonrecurring engineering charges at the rates set forth in EXHIBIT A and any additional charges required for a second iteration.

Section 3.3. Products and Process

Amendments to electrical test specification limits specified in Exhibit B and in Hynix' s process flows shall only be made upon prior written consent of CUSTOMER and HSA.


HSA and FOUNDRY shall process, at CUSTOMER' S expense, first silicon for each Product meeting process specifications included in Exhibit B. First silicon may include mutually agreed Poly Critical Dimension or any other relevant experiment conditions, in which case the Exhibit B specification is waived for electrical parameters effected by the split.


CUSTOMER shall perform or separately contract wafer sort/probe, assembly, and final test (including production burn-in if appropriate) for the first silicon qualification Lot and provide the test results to HSA AND FOUNDRY within (3) months of receipt date. CUSTOMER shall perform or separately contract all wafer level, Product and assembly stresses and evaluations required to complete the qualification and provide HSA and FOUNDRY with the results within (3) months.

Section 3.4. Second Iteration . CUSTOMER shall pay for any correction or modification to the Prototypes, including, but not limited to the cost of making new masks. In a case where the modification is limited to the metal layers, CUSTOMER shall provide the revision mask layers as required. In a case where the modification is not limited to the metal layers, CUSTOMER shall pay a dollar amount equal to one hundred percent (100%) of the original nonrecurring engineering charges set forth in Section 3.1.


Section 3.5. Good Die Pricing Methodology. FOUNDRY & CUSTOMER agree to a target die price, based on the projected good die yield as stated in Exhibit A. The final die price may be adjusted up or down depending on results of the margin rating and verified by the yield from 10 lots of 25 or 50 wafers each initially, for pre-qualification risk production, product will be ordered and invoiced by wafer level pricing. Successful margin rating is defined as a valid skew lot definition and execution, a minimum of 10 lots of wafers processed correctly, using the process technology described in Exhibit B, in accordance with Hynix' s PCM Acceptance Criteria, and achievement of mutually acceptable yield results. At Hynix' s option, any changes to the test program or product design may require a new margin rating.

Section 3.6. Yield Improvement : Risk wafers for yield improvement will be ordered and invoiced by wafer level pricing. FOUNDRY will accept responsibility for maintaining it' s process within the prescribed limits of the electrical rules and physical layout rules as documented in FOUNDRY' s design rules, including pre-approved design rule waivers for custom IP, and responsibility for systemic defects, for example, (cd' s, film thickness, implant doses, etc.) as evaluated by the PCM data and random defects (particles)

CUSTOMER will accept responsibility for the design meeting FOUNDRY' S electrical and physical design rules per specifications listed in Exhibit B .


Section 3.6. Turnkey . HSA and FOUNDRY may subcontract assembly and test to a designated subcontractor. If an HSA and FOUNDRY designated Assembly and Test subcontractor is used, the subcontractor shall be subject to the non-disclosure terms at least as restrictive as stated herein and be subject to the written consent of CUSTOMER.


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ARTICLE IV

PURCHASE OF VOLUME PRODUCTION PRODUCTS


Section 4.1. Purchase Orders . Purchase orders shall be issued by CUSTOMER to HSA, at its address above provided and shall reference HSA' s Volume Production Sales Agreement terms and conditions as controlling except for those items specified and separately agreed to by HSA on the face of CUSTOMER' s purchase order form. HSA reserves the right to negotiate CUSTOMER credit standing, purchase order pricing, volume and schedule. A copy of HSA' s Volume Production Sales Agreement is attached hereto as Exhibit C . HSA will not accept purchase orders for volume production without CUSTOMER' s prior written confirmation of its acceptance of the Prototype. Purchase orders accepted by HSA for Product prior to written acceptance of Prototype are agreed to be Risk Production units as set forth in Section 4.4.


CUSTOMER shall place purchase orders for the Production Product with the volume and delivery requirements for the three (3) month period following the date for which the Production Product will be available for delivery. Thereafter, the first week of each successive month after issuance of the initial purchase order, CUSTOMER shall issue additional purchase orders and/or amendments so that HSA shall continue to have on a revolving basis, firm purchase orders effective for the next immediate succeeding three months following the issuance of such additional purchase orders. Each purchase order shall obligate CUSTOMER to purchase at least the minimum of 2 (25 or 50 wafers per lot) wafer lots or units equivalent to 2 lots. No purchase order shall require delivery of any Product earlier than ninety (90) days from the effective date of the purchase order without prior written approval from HSA. Every such purchase order shall contain such unit pricing, delivery and quantity terms as accepted in writing by HSA. The purchase and sale of Products between CUSTOMER or CUSTOMER' s approved agents, if any, and HSA shall be governed solely and exclusively by this Agreement, and HSA' s Volume Production Sales Agreement, which shall supersede the terms and conditions contained in any purchase order, acknowledgment or other document related to the purchase and sale of Products, all of which terms and conditions are hereby expressly waived.


Section 4.2. Changes in Purchase Orders . Changes to firm purchase orders to decrease the quantity or to increase the quantity, price or delivery schedule within ninety (90) days of shipment, may be made only with the prior written consent of HSA. CUSTOMER shall not increase or decrease the volume of Products by more than fifty percent (50%), unless otherwise consented to in advance by HSA, and in any event such changes shall not decrease the volume for any month to less than the minimum release quantities set forth in Exhibit C . Any increase in volume in a purchase order for Product that is scheduled to ship in less than ninety (90) days will only be granted as a pull-in from Product for which orders were placed and Product is available for delivery.

The Purchase Orders and Forecasts for Product not scheduled to ship within the following ninety (90) days, ...