Exhibit 10.33
Redacted Version
MASTER SEMICONDUCTOR FOUNDRY AND TECHNOLOGY TRANSFER AGREEMENT
Confidential Treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.
Table of Contents
Page
1.
DEFINITIONS 2
2.
FOUNDRY SERVICES 6
3.
TECHNOLOGY TRANSFER AND ASSISTANCE 8
4.
PRE-PRODUCTION QUALIFICATION AND ACCEPTANCE 10
5.
PRODUCTION QUALITY, RELIABILITY AND CONTROL 11
6.
PARTIES' ACTIVITIES 14
7.
PRICING, COSTS AND PAYMENTS 15
8.
CAPACITY PLANNING AND FORECASTING 16
9.
ORDER, SHIPMENT AND ACCEPTANCE 17
10.
PRODUCT WARRANTIES AND FAILURES 19
11.
INTELLECTUAL PROPERTY OWNERSHIP 19
12.
INTELLECTUAL PROPERTY LICENSES 21
13.
PROTECTION OF TECHNOLOGY AND INTELLECTUAL PROPERTY 22
14.
INDEMNIFICATION 23
15.
CONFIDENTIALITY 24
16.
TERM AND TERMINATION 25
17.
DISPUTE RESOLUTION 26
18.
LIMITATION OF LIABILITY 27
19.
MISCELLANEOUS 28
EXHIBIT A1 PROCESS SUPPLEMENT #1 30
EXHIBIT B1 PRODUCT SUPPLEMENT #1 32
MASTER SEMICONDUCTOR FOUNDRY AND TECHNOLOGY TRANSFER AGREEMENT
THIS MASTER SEMICONDUCTOR FOUNDRY AND TECHNOLOGY TRANSFER AGREEMENT (this" Agreement" ) dated and effective as of August 10, 2005 (the " Effective Date" ) is by and between Spansion LLC, a Delaware Limited Liability Company having a principal place of business at 915 DeGuigne Drive, P.O. Box 3453, Sunnyvale, California, USA 94088-3453 (" Company" ) and Taiwan Semiconductor Manufacturing Company, Ltd., a company duly incorporated under the laws of Taiwan, Republic of China, having its principal place of business at No. 8 Li-Hsin Road 6, Science-Based Industrial Park, Hsin-Chu, Taiwan, R.O.C., (" TSMC" ) and its wholly owned subsidiary, TSMC North America, a company duly incorporated under the laws of the State of California, having its principal place of business at 2585 Junction Avenue, San Jose, California 95134 (" TSMC NA" ). TSMC and TSMC NA, collectively, may be referred to herein as " Foundry" . Company, TSMC NA and TSMC are each, individually a " Party" and collectively the " Parties" .
WITNESSETH:
WHEREAS, Company has designed and developed certain semiconductor products which it sells to the commercial market and wishes to contract with a third party for the manufacture of its products;
WHEREAS, Company has developed certain process technology associated with such semiconductor products, and desires to transfer such technology to such third party solely for the purpose of manufacturing products for Company;
WHEREAS, TSMC has the capacity and skill to manufacture high quality semiconductor products in volume;
WHEREAS, TSMC NA is the exclusive distributor in North America for products manufactured by TSMC;
WHEREAS, Company and Foundry desire to establish a strategic supplier relationship where Foundry will utilize its capacity to manufacture certain semiconductor products for Company;
WHEREAS, the Parties now wish to establish the terms and conditions for the transfer of manufacturing technology from Company to TSMC, the fabrication of semiconductor products by TSMC and provision of related services, and the purchase of the same by Company from TSMC NA; and
WHEREAS, the Parties intend that this Agreement be a master contract for the fabrication by TSMC and transfer of any necessary technology to TSMC for such fabrication, and supply of various semiconductor products by TSMC NA as are described in sequentially identified Product Supplements that may be attached to this Agreement from time to time, that are mutually agreed upon in writing by the Parties.
NOW, THEREFORE, Company and Foundry agree to enter this Agreement to accomplish the foregoing premises in accordance with the following terms and conditions:
AGREEMENT:
1. DEFINITIONS
1.1 " Company Technology" has the meaning set forth in Section 11.1 (entitled - Technology Owned by Company).
1.2 " Company Support Plan" has the meaning set forth in Section 8.2 (entitled - Capacity Commitment).
1.3 " Confidential Information" means any information obtained by one Party from the other in connection with this Agreement which is in written, graphic, machine readable or other tangible form and is marked " Confidential" , " Proprietary" or in some other manner to indicate its confidential nature. Confidential Information may also include oral information disclosed by one Party to the other pursuant to this Agreement, provided that such information is designated as confidential at the time of disclosure and either has previously been provided in an appropriately marked writing or is reduced to a written summary by the disclosing Party, within thirty (30) days after its oral disclosure, which is marked in a manner to indicate its confidential nature and delivered to the receiving Party. Such Confidential Information includes, but is not limited to, Technical Information transferred hereunder, and all copies and derivatives thereof, and information received as a consequence of rendering or receiving technical assistance, owned or controlled by either Party, which relates to its past, present or future activities with respect to the subject matter of this Agreement, provided that if such Confidential Information is disclosed by one of the Parties to the other Party in written and/or graphic or model form, or in the form of a computer program or data base, or any derivation thereof, the disclosing Party must designate it as confidential, in writing, by an appropriate legend, together with the name of the Party so disclosing it, such as Company Confidential Proprietary or Foundry Confidential Proprietary Information.
1.4 " Company Product" means a proprietary integrated circuit product of Company set forth on a Product Supplement (including all Technology embodied in and related to the functionality of such device except as may be called out in a Product Supplement) that conforms to the applicable Product Specification and the logic design or architecture provided to Foundry by Company hereunder, including all updates thereto.
1.5 " Company Process" means the proprietary wafer manufacturing process of Company set forth on a Process Supplement (i.e., the process for converting a raw Wafer into a finished Wafer, including Wafer preparation and Wafer processing), but not including: (a) Technology related to the circuitry contained within, or the functionality of, the Company Product so produced on the Die by such manufacturing and process technology, such as, by way of example only, the layout design or architecture of the circuitry of the memory device or circuitry and (b) TSMC process Technology.
1.6 " Contract Wafers" means Wafers manufactured by TSMC for Company, including qualification Wafers, test Wafers, risk start Wafers, and yielded (fully-sorted circuit probe yield) undiced Wafers, the individual Die which are Company Products and which are manufactured using the applicable Company Process.
1.7 " Copyrights" means: (a) any rights in original works of authorship fixed in any tangible medium of expression as set forth in the United States Copyright Act, 17 U.S.C. a7 101 et . seq .; (b) all registrations and applications to register the foregoing anywhere in the world; (c) all foreign counterparts and analogous rights anywhere in the world; and (d) all rights in and to any of the foregoing.
1.8 " Die" means an individual integrated circuit or components which when completed create an integrated circuit.
1.9 " Facilities" means the Foundry' s physical manufacturing facility located at ****, and such other facilities as may be qualified by Company (and specifically approved by Company in writing) to produce Contract Wafers for Company.
1.10 " Firmly Forecast Orders" has the meaning set forth in Section 8.1 (entitled - Four Quarter Forecasts).
1.11 " Foundry Services" has the meaning set forth in Section 2.1 (entitled - Foundry Services).
1.12 " Four Quarter Forecast" has the meaning set forth in Section 8.1 (entitled - Four Quarter Forecasts).
1.13 " Gross Die per Wafer" (" GDW" ) means the total quantity of Die candidates on each Wafer, whether or not the Die is operational when the Wafer has completed the manufacturing process.
1.14 " Improvements" means with respect to any Technology, all discoveries, innovations, improvements, enhancements, derivative works, or modifications of or to such Technology.
1.15 " Intellectual Property Rights" means any and all: (a) Copyrights, mask work rights, trademarks, and Patents; (b) rights relating to innovations, know-how, trade secrets, and confidential, technical, and non-technical information; (c) moral rights, author' s rights, and rights of publicity; and (d) other industrial, proprietary and intellectual property related rights anywhere in the world, and all applications for, renewals and extensions of the foregoing now or hereafter filed, regardless of whether or not such rights have been registered with the appropriate authorities in such jurisdictions in accordance with the relevant legislation.
1.16 " Jointly Developed Technology" means Technology that is written, created, or otherwise made or acquired not solely by one or more employees of one Party but is created jointly by employees or contractors of Company together with employees or contractors of Foundry during and in the course of the transactions contemplated by this Agreement provided that: (a) with respect to copyrightable material, each contributing Party prepared the work with
Confidential Treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.
the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole; (b) with respect to inventions subject to patent protection, each contributing Party made some original contribution to the inventive thought and to the final solution; and (c) with respect to matter subject to trade secret protection, each contributing Party made substantial contributions to such matter.
1.17 " Lot" means a group of Contract Wafers which are processed simultaneously. Each Lot will be assigned a specific alpha/numeric identification that distinguishes it from any other group that contains the same type of Die so that each Lot can be separately identified.
1.18 " Minimum Yield" means, with respect to a particular Contract Wafer, the minimum acceptable Yield for such Wafer as set forth in the corresponding Product Supplement.
1.19 " Net Die per Wafer" (" NDW" ) means the total quantity of Die on a Contract Wafer that pass the Probe Program applicable to that Contract Wafer.
1.20 " Operating Profit" means an amount equal to Company' s gross revenue per Contract Wafer less: (a) the applicable Base Wafer Price plus the associated ATMP costs; and (b) 25% of Company' s gross revenue per Wafer. For purposes of the foregoing, the " ATMP" costs shall include costs incurred by Company for assembly, test, mark and package of its final goods and other manufacturing costs associated with such goods.
1.21 " Patents" means: (a) patents and patent applications, worldwide, including all divisions, continuations, continuing prosecution applications, continuations in part, reissues, renewals, reexaminations, and extensions thereof and any counterparts worldwide claiming priority therefrom; utility models, design patents, patents of importation/confirmation, and certificates of invention and like statutory rights; and (b) all rights in and to any of the foregoing.
1.22 " Probe Program" means the specific set of electrical and mechanical tests provided by Company or mutually agreed upon by TSMC and Company and set forth in a Product Supplement which test the electrical operational characteristics for each Die on a Contract Wafer.
1.23 " Process Project Schedule" has the meaning set forth in Section 3.1(b) (entitled Phase-In Projects).
1.24 " Process Specifications" mean the technical specifications provided by Company for the Company Process as further described and delivered as set forth in the applicable Process Supplement.
1.25 " Process Supplement" means a written exhibit to this Agreement duly executed by the Parties that sets for the particular terms and conditions pursuant to which a specific Company Process will be implemented at the Facilities and which exhibit is sequentially identified (i.e., as Exhibit A1 , Exhibit A2 ) for each such Company Process and, as applicable, sets forth or includes as an attachment: (a) a description of the particular Company Process to be implemented and the specifications therefor; (b) the particular Facilities at which the
Company Process is to be implemented; (c) the implementation schedule and/or implementation milestones; (d) any Foundry Services not otherwise set forth herein to be provided; (f) the Technology to be provided by the Parties; and (g) any fees, reimbursements or cost allocations in connection with such implementation other than as set forth herein. In addition, each Process Supplement shall include as an attachment one or more Process Project Schedules containing the information described in Section 3.1(b) (entitled Phase-In Project).
1.26 " Product Specifications" mean the technical specifications provided by Company for the Company Product as further described and delivered as set forth in the applicable Product Supplement.
1.27 " Product Supplement" means an written exhibit to this Agreement duly executed by the Parties that sets forth particular terms and conditions pursuant to which specific Contract Wafers will be provided pursuant to this Agreement and which exhibit is sequentially identified (i.e., as Exhibit B1 , Exhibit B2 ) for each such Contract Wafer and, as applicable, sets forth or includes as an attachment: (a) a description of the particular Company Product to be manufactured on the Contract Wafers to be provided and the specifications therefor; (b) the applicable Company Process to be used; (c) the Foundry Services to be provided not otherwise set forth in Section 2.1 (entitled Foundry Services); (d) the applicable Probe Program (or process for determining such program); (e) implementation schedule; (f) any foundry qualification plan, qualification acceptance criteria and foundry loading plan; (f) the applicable Target Yield and Minimum Yield; (g) any Technical Information and/or Technology to be provided by the Parties; (h) the pricing for the Contract Wafers; and (i) whether Foundry will be Company' s sole source foundry for the applicable Contract Wafers as contemplated in Section 2.5 (entitled Sole Source Foundry).
1.28 " Project Manager" has the meaning set forth in Section 3.2 (entitled - Transfer Project Managers).
1.29 " Purchase Order" has the meaning set forth in Section 9.1 (entitled - Order Placement).
1.30 " Scrap" means any Wafer or Die, in any stage of completion, without regard to its ability to function, that is not in conformance with the requirements of this Agreement for Contract Wafers to be sold to Company.
1.31 " Target Yield" means, with respect to a particular Contract Wafer, the Target Yield for such Contract Wafer as set forth in the applicable Product Supplement. Notwithstanding the foregoing, the Target Yield is subject to post qualification confirmation and adjustment pursuant to Section 4.4 (entitled - " Baseline Establishment and Loading" ).
1.32 " Technical Information" means the technical information and materials to be provided with respect to a Company Product as set forth in the applicable Product Supplement.
1.33 " Technology" means any and all technical information, specifications, drawings, records, documentation, works of authorship or other creative works, ideas, algorithms, models, databases, ciphers/keys, systems architecture, network protocols, research, development, and manufacturing information, software (including object code and source code), application programming interfaces (APIs), innovations, mask works, logic designs, circuit designs, technical data, processes and methods.
1.34 " Term" has the meaning set forth in Section 16.1 (entitled - Term of Agreement).
1.35 " Transfer Team" has the meaning set forth in Section 3.1 (entitled - Process Phase-In).
1.36 " Transfer Resources" has the meaning set forth in Section 3.1 (entitled - Process Phase-In).
1.37 " TSMC Technology" has the meaning set forth in Section 11.2 (entitled Technology Owned by TSMC).
1.38 " Verification Test Program" has the meaning set forth in Section 5.3(a) .
1.39 " Wafer" means the direct material substrate (raw material) which as a result of the semiconductor fabrication process is incrementally transformed to consist of several operational integrated circuit products in unpackaged form.
1.40 " Wafer Standards" has the meaning set forth in Section 10.1 (entitled Product Warranty).
1.41 " Yield" means the percentage represented by Net Die per Wafer (NDW) divided by Gross Die per Wafer (GDW).
2. FOUNDRY SERVICES
2.1 Foundry Services . For the Term of this Agreement, TSMC shall manufacture and TSMC NA sell and deliver to Company Contract Wafers and Company Product and at Company' s request TSMC shall perform mask-making (and photolithography optimization). In addition, TSMC shall perform wafer probe testing and other associated manufacturing tasks including performing failure analysis, process engineering, and pre-production testing, qualification and optimization activities described below. Subject to section 9.4, Foundry shall transport **** to **** and obtain and maintain **** for Contract Wafers. TSMC shall also work with Company to successfully conclude the technology transfer of necessary manufacturing technology, and other activities agreed upon by the Parties in writing and set forth in any Process Supplement or Product Supplement. Collectively, these tasks to be performed by TSMC and TSMC NA are the " Foundry Services ." Foundry agrees to perform the Foundry Services in accordance with the terms and conditions of this Agreement. Company will be responsible for product design; for assembly, final test, marking and packaging; and for distribution and sales and may perform or arrange for mask-making.
2.2 Outsourcing/Delegation . Foundry may engage affiliates or third parties to perform certain ancillary Foundry Services (such as mask-making, wafer probe testing, Wafer transport, product engineering and support), provided, however, that Foundry shall: (a) actively oversee and monitor the provision of such Foundry Services; (b) remain primarily liable to
Confidential Treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ****. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission.
Company for such affiliates (including without limitation TSMC NA) or third parties (including for any breach of this Agreement by such third parties); (c) Foundry agrees to indemnify and hold Company harmless from any failure on the part of any Foundry' s affiliates or such third parties to comply with the terms and conditions of this Agreement; and (d) not engage any affiliate or third party to provide a Foundry Service in which such third party would receive or have access to any Company Confidential Information (or matter from which such information could be derived) unless (i) Company has approved such affiliate or third party in writing, and (ii) such affiliate or third party has agreed in writing to confidentiality obligations with respect to such Confidential Information which are at least as protective as those set forth herein. For the avoidance of doubt, TSMC shall not outsource or delegate to any affiliate or third party the manufacture of Contract Wafers nor shall this section otherwise limit TSMC' s obligation to manufacture Contract Wafer' s solely at the Facilities.
2.3 Site Restriction. All manufacturing of Contract Wafers will take place at the Facilities. If TSMC desires to manufacture Contract Wafers at another facility or transfer any Company Technology or Company Technical Information to another TSMC facility, it will give Company at least one hundred and eighty (180) days prior notice of the relocation to the new facility and the parties will mutually agree to a reasonable transition plan to avoid adverse impact on Company' s revenue stream. If Company notifies TSMC within ninety (90) days of its reasonable objection to the new location, TSMC will not transfer the manufacture of such materials to the new facility. If a transfer occurs, all transferred Contract Wafers and manufacturing processes will be requalified to the extent necessary. Company realizes that for reasons of higher volumes; lower defect density, newer equipment or backup capacity that a transfer to another factory may be in the best interest of both Parties. If the transfer to another facility is made because Company' s demand for Contract Wafers exceeds the manufacturing capacity initially established by the Parties or as a result of other Company requirements, the Parties shall mutually agree upon the allocation of additional costs caused by such transfer. If the transfer to another facility occurs solely for TSMC' s convenience or for other causes not directly related to Company interests, TSMC shall bear the costs of the transfer. Company will use reasonable efforts to rationalize the details relating to foundry transfers for both Parties benefit.
2.4 Future Technology Nodes. This Agreement contemplates that production of the Contract Wafers will initially use Company' s 110nm Company Process under Process Supplement Number 1. The Parties anticipate that, if they successfully commence production volumes of such Contract Wafers, they will extend their foundry business relationship to smaller feature sized (90nm, 65nm, other nodes) products under subsequent Process Supplements. In that regard, promptly following the Effective Date, the Parties shall discuss the terms and conditions appropriate to implementing Company' s process technology at the 90nm technology node. Such arrangements shall be implemented as a Process Supplement to this Agreement, provided, however, that for each technology node the Parties shall separately establish a pricing formula or matrix that shall be the basis on which the pricing for all products for such node shall be substantially derived (e.g., for a particular node the Parties may develop a pricing matrix based on masks layers, metal layers, process steps or other variables as the Parties so agree).
2.5 Sole Source Foundry . During the Term, Company may in its sole discretion designate TSMC (in the applicable Product Supplement or otherwise) as Company' s sole third party foundry for the supply of specified Contract Wafers to be provided under this Agreement. Such designation may be revoked at any time by Company upon written notice to TSMC. For so long as TSMC is Company' s sole source for any Contract Wafers, Foundry shall accord Company with such pricing, priority treatment and other benefits as it provides its other sole source customers with respect to such Contract Wafers. Notwithstanding the foregoing, even if Company has designated Foundry as its sole source for any Contract Wafers, Company shall have the right to engage an alternative third party foundry for the product of such Wafers in the event that: Foundry does not meet (or indicates that it will be unable to meet) Company' s capacity requirements for such Contract Wafers (as further described below) or otherwise is in breach of its supply obligations hereunder. For clarity, the foregoing shall not be construed to preclude Company from at any time manufacturing any Contract Wafers through its own foundry facilities (or those of its Affiliates).
2.6 Execution of Supplements . From time to time during the Term of this Agreement, the Parties may execute one or more Process Supplements or Product Supplements as further described below. Each such Process Supplement or Product Supplement shall be subject to the terms and conditions set forth in this Agreement as if fully set forth therein, unless and to the extent the Parties expressly agree otherwise in writing. No Process Supplement or Product Supplement shall be binding upon either Party unless and until executed by the duly authorized representatives of each of the Parties. For avoidance of doubt, in the event of a conflict between the terms of this Agreement and any Process Supplement or Product Supplement, the terms of the supplement shall control.
3. TECHNOLOGY TRANSFER AND ASSISTANCE
3.1 Process Phase-In . Company desires to have TSMC manufacture the Contract Wafers using certain process Technology employed in Company' s own wafer foundry facilities and that meets Company' s specifications at the Facilities. To this end, the Parties shall execute from time to time during the term individual Process Supplements for each Company Process (e.g., for a particular process node) to be implemented at the Facilities. In connection therewith, the Parties shall undertake the following technology transfer activities to phase in the implementation of such Company Process Technology.
(a) Process Specifications With respect to each Process Supplement, Company shall deliver the technical specifications listed and described in the Process Supplement in accordance with the time schedule provided in such Process Supplement. Without limiting the foregoing, both Company and Foundry will contribute necessary technical resources and manpower for successfully establishing the Company Process at TSMC within the schedule set forth in such Process Supplement. The Parties agree to use commercially reasonable efforts to achieve the milestones or execute statements of work that may be identified in Process Supplements or as otherwise mutually agreed. Should there be any delay or delinquency, the Parties agree to negotiate, in good faith, for a commercially reasonable solution.
(b) Phase-In Projects The Parties agree to implement each Company Process at the applicable Facilities in accordance with the program schedule set forth in the
corresponding Process Supplement. With respect to each Process Supplement, the Parties contemplate that each of several project schedules to such Process Supplement will document each new phase in process Technology transfer project, and be executed pursuant to this Agreement (each a " Process Project Schedule" ). Each Process Project Schedule shall at a minimum include or identify: (i) a description of the Company Technology and the Foundry Technology to be transferred, (ii) a brief description and definition of the transfer project; (iii) the Parties respective Project Managers (defined below); (iv) the identify, number and/or qualifications of the Parties respective personnel to be assigned to the project (the " Transfer Team" ) ; (v) a detailed statement of the resources to be contributed by each Party for such project (the " Transfer Resources" ) ; (vi) a detailed technical specification and corresponding process qualification, acceptance and testing procedure; (vii) a reasonably detailed description of the work to be performed under the project, either in the Process Project Schedule or a separate statement of work, setting forth all applicable due dates, project deliverables, acceptance tests and a list of progress payments, if any, as well as the Parties respective tasks, contributions and responsibilities; and (viii) all other fees and reimbursable expenses, if any.
(c) Phase-In Project Delays Each Party shall promptly provide the other with notice as soon as possible after it has reason to believe it will be unable to timely deliver any required deliverable together with ...
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