1
EXHIBIT 10.6
REDACTED FOR CONFIDENTIALITY
DATED THIS 5TH DAY OF NOVEMBER, 1998
AMONG
CHARTERED SILICON PARTNERS PTE LTD
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
AND
HEWLETT-PACKARD COMPANY
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AMENDMENT AGREEMENT NO. 1
TO
ASSURED SUPPLY AND DEMAND AGREEMENT 64-225
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The Company - CSM - HP Confidential
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AMENDMENT AGREEMENT NO. 1
TO
ASSURED SUPPLY AND DEMAND AGREEMENT 64-225
THIS AMENDMENT AGREEMENT (NO. 1) is made the 5th day of November 1998 (the
"Effective Date"), by and among:
(1) CHARTERED SILICON PARTNERS PTE LTD, a company incorporated in Singapore
with its registered office at 00 Xxxxxxxxx Xxxxxxxxxx Xxxx X, Xxxxxx 0,
Xxxxxxxxx 000000 (hereinafter referred to as the "Company");
(2) CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
Singapore with its registered office at 00 Xxxxxxxxx Xxxxxxxxxx Xxxx X,
Xxxxxx 0, Xxxxxxxxx 000000 (hereinafter referred to as "CSM"); and
(3) HEWLETT-PACKARD COMPANY, a company incorporated in California, U.S.A. and
having its principal place of business at 0000 Xxxxxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxxxxx, X.X.X. 00000 (hereinafter referred to as "HP").
The Company, CSM and HP are sometimes collectively referred to herein as
"Parties" and individually referred to herein as a "Party".
WHEREAS
(A) The Parties had entered into an Assured Supply and Demand Agreement 64-225
dated 4 July 1997 (the "ASADA 64-225") relating to the provision of Wafer
manufacturing capacity by the Company and CSM to HP.
(B) In recognition of the increasing rate of technology migration in the
semiconductor industry and the prevailing market conditions, the Parties
have mutually agreed that 0.25um process technology (instead of 0.35um
process technology) should be the first process technology to be installed
in the Company Fab. Accordingly, the Parties desire to delay the
commencement of operations of the Company Fab to such time as 0.25um
process technology is ready for installation, and CSM has agreed to make
available to the Company, wafer manufacturing capacity to enable the
Company to fulfill HP's demand for Wafers manufactured using 0.35um
process technology. For the avoidance of doubt, the Parties agree that
Wafers of the 0.35um process technology are not planned to be manufactured
in the Company Fab. Therefore, the Company, CSM and HP acknowledge HP's
desire for alternative sourcing of 0.35um Wafers through CSM fabs on the
terms of this Agreement.
The Company - CSM - HP Confidential
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
(C) The Parties are entering into this Amendment Agreement to vary the ASADA
64-225 with effect from the date hereof.
IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1 In this Agreement, unless the subject or context otherwise requires, the
following words and expressions shall have the following meanings
respectively ascribed to them:-
"Company Fab Start-Up Date" shall mean the date on which the Company Fab
is scheduled to output Wafers ordered by HP, such date to be mutually
agreed by the Parties in accordance with Clause 4.1 of this Agreement.
"Suspension Period" shall mean the period commencing from the Effective
Date and ending on the date immediately preceding the Company Fab Start-Up
Date.
"HP-Compatible Equipment Set" shall mean the identical equipment in use by
an internal HP ICBD facility manufacturing a Wafer technology node (in
other words, base core technology) or advanced technology nodes beyond the
Wafer technology node in question. By way of example, the HP-Compatible
Equipment Set for the C10 Process is the identical equipment in use by an
internal HP ICBD facility manufacturing C10 Process Wafers or other
advanced processes such as C07 and C05, etc.
"HP Standard Products" shall mean application-specific standard products
that are not customer-specific, or, in other words, are sold to multiple
customers. For the avoidance of doubt, the spirit and intent of the
Parties' discussions germane to HP Standard Products emphasized the
customers' inactive participation in Wafer process qualification
requirements. HP Standard Products comprise those products whose HP
customers have very little or no involvement in the Wafer process
qualification, thereby allowing HP, CSM and the Company to jointly
determine optimal strategies for the Wafer manufacturing facilities in
which the HP Standard Products are to be produced and to allow HP to
determine the appropriate process qualification requirements without
significant customer intervention.
1.2 All other terms and references used in the ASADA 64-225 and which are
defined or construed in the ASADA 64-225 but are not defined or construed
in this Amendment Agreement shall have the same meaning and construction
in this Amendment Agreement.
2. CSM SUPPLY COMMITMENT & HP WAFER PURCHASE COMMITMENT
2.1 CSM hereby agrees to provide to the Company wafer manufacturing
capacity (the "CSM Supply Commitment") in respect of the ************ and
********** processes as well as other process variants mutually agreed by
the Parties (collectively, the "C10
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
Process") out of CSM's Fab 3 and/or other Fab facilities to enable the
Company to fulfill HP's demand for C10 Process Wafer supply.
2.2 The CSM Supply Commitment shall be expressed as a quantity of Wafers and
shall be determined in accordance with Appendix A of this Agreement. The
CSM Supply Commitment shall be available to the Company until such time as
the C10 Process is obsoleted pursuant to Clause 2.4 of this Agreement.
2.3 HP agrees to place HP Purchase Orders with the Company for semiconductor
Wafers (the "HP Wafer Purchase Commitment") in respect of the C10 Process.
The Company in turn agrees to place purchase orders with CSM for such
quantity of semiconductor Wafers as is equal to the HP Wafer Purchase
Commitment. Further, the Company agrees to place purchase orders with CSM
for such delivery requirements and technical specifications of Wafers as
are identical to the HP Purchase Orders on the Company.
The HP Wafer Purchase Commitment shall be expressed as a quantity of
Wafers and shall be determined in accordance with Clause 2 of the ASADA
64-225 (as retained, amended or suspended in Clause 3.3 of this Agreement)
and Appendix A of this Agreement. At the time when the Company determines
the Company Wafer Supply Commitment in accordance with Appendix A, CSM,
the Company and HP shall also determine the HP Wafer Purchase Commitment
as set forth in Appendix A.
2.4 CSM is entitled to obsolete the C10 Process in its Fab facilities in the
following events:-
(a) upon CSM providing ******** advanced written notice to HP and the
Company, such notice shall not be provided prior to
*****************; or
(b) in the event that the aggregate quantity of HP Purchase Orders for
C10 Process Wafers for a period of * consecutive months is less than
*** Wafers, CSM shall be entitled to give ********* advanced written
notice to HP and the Company to obsolete the C10 Process.
2.5 CSM shall provide the CSM Supply Commitment from its Fab 3 facility,
and/or if mutually agreed by HP and CSM, from any other CSM Fab facility;
and in respect of the tapeout of each new device, HP and CSM shall by
mutual agreement determine in which CSM Fab facility such device shall be
manufactured. The Parties intend that the supply of C10 Process Wafers for
HP C10 system-level-integration ASIC products from a CSM Fab facility
other than CSM's Fab 3 should be on a converged equipment set with that of
CSM Fab 3 or on a HP-Compatible Equipment Set. In the event that either
CSM or HP wishes to deviate from this intent, CSM and HP shall meet in
good faith to mutually agree on the equipment set to be installed in the
relevant CSM Fab facility. However, for the avoidance of doubt, it is the
Parties' intent to manufacture all HP C10 system-level-integration ASIC
Wafers in CSM Fab 3 through the Suspension Period and beyond the Company
Fab Start-Up Date but subject to Clause 2.4. The utilization of CSM fabs
other than CSM Fab 3 for the manufacture of C10 Process Wafers shall be as
mutually agreed in writing by the Parties when CSM Fab 3 capacity is
insufficient and additional C10
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
Process Wafer manufacturing capacity is required to fulfill the CSM Supply
Commitment. It is the Parties' intent to initially manufacture all HP
Standard Product Wafers in CSM Fab 3. In the eventuality that HP Standard
Products are considered for manufacture outside CSM Fab 3, the Parties
shall at the appropriate time meet and mutually agree on the equipment set
and appropriate fabrication facility for the supply of C10 Process Wafers
for HP Standard Products. All other terms relating to the CSM Supply
Commitment and the HP Wafer Purchase Commitment for C10 Process Wafers
shall be the same irrespective of which facility in which the Wafers are
manufactured.
2.6 The price of Wafers supplied by CSM to the Company under the CSM Supply
Commitment shall be *****************************************************
********************* of the ASADA 64-225, provided however, that the
Company shall provide such Wafers to HP on pricing determined in
accordance with Clause 1.4 of the ASADA 64-225.
2.7 The CSM Supply Commitment shall be included towards fulfilling the Company
Wafer Supply Commitment as if the Company was actually providing such C10
Process capacity to HP out of the Company Fab, and the HP Purchase Orders
for C10 Process Wafers shall be included towards fulfilling the HP Wafer
Purchase Commitment as if such HP Purchase Orders were actually
manufactured in the Company Fab.
2.8 The Parties acknowledge that they intend to work together to establish and
install the C10 Process in CSM's Fab 3 facility. Accordingly, the
provisions of Clause 4 of the ASADA 64-225 for the payment of liquidated
damages shall not be effective in respect of the Company Wafer Supply
Commitment, the HP Wafer Purchase Commitment and HP's compliance with its
monthly HP Forecast commitments until such time as HP has ordered and
CSM's Fab 3 facility has produced for HP and shipped to HP ***************
************ on C10 Process. All liquidated damages received by the
Company from HP shall be paid by the Company to CSM, and all liquidated
damages payable by the Company to HP shall be paid by CSM to the Company
for payment to HP. For the avoidance of doubt, all liquidated damages
referenced in this Clause 2.8 have specific and exclusive reference to C10
Process Wafers.
3. SUSPENSION OF CERTAIN TERMS OF THE ASADA 64-225
3.1 The Parties agree that the provisions of Clause 3 of the ASADA 64-225
relating to the Bridge Supply Commitment shall not apply to the CSM Supply
Commitment for the C10 Process and accordingly, the provisions of Clause 3
of the ASADA 64-225 shall be suspended for the duration of the Suspension
Period, and shall take effect on the Company Fab Start-Up Date, unless
otherwise in accordance with Clause 3.2 of this Agreement.
3.2 It is the current intent of the Parties to install the *********** and
********** processes as well as other process variants mutually agreed by
the Parties (collectively, the "C7 Processes") in the Company Fab on the
Company Fab Start-Up Date. In the
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event that the Company fails or is unable to supply C7 Process Wafers from
the Company Fab on the Company Fab Start-Up Date, then the provisions of
Clause 3 of the ASADA 64-225 relating to the Bridge Supply Commitment
shall take effect and CSM shall provide such Bridge Supply Commitment to
the Company to enable the Company to fulfill HP's demand for C7 Process
Wafer supply.
3.3 The Parties agree that in respect of the supply and purchase of C10
Process Wafers, certain provisions of the ASADA 64-225 shall be suspended
and replaced by provisions of this Agreement, and certain provisions of
the ASADA 64-225 shall be retained and shall remain in effect, as
follows:-
ASADA 64-225 REPLACED BY THIS
CLAUSE NO. STATUS AGREEMENT CLAUSE NO.
------------ --------- --------------------
1.1 and 1.2 Suspended 2.1, 2.2, 2.4 and 2.5
1.3, 1.4, 1.5, 1.6 Retained N.A.
1.7 Retained N.A.
2.1 first paragraph Suspended 2.3 and 2.7
2.1 second paragraph Retained N.A.
2.2, 2.3 and 2.4 Retained N.A.
2.5 Suspended None. However, this Clause
does not negate the Company's
responsibility to provide Wafer
manufacturing capacity beyond Fab
3 in order to meet the Company
Wafer Supply Commitment, the
spirit of which was defined in
Clause 2.5 of this Agreement.
3.1, 3.2 and 3.3 Suspended 3.1
4.1 Suspended 2.8
4.2, 4.3, 4.4. 4.5, Retained N.A.
4.6 and 4.7
5, 6, 7, 8, 9, 10, 11, Retained N.A.
12, 13, 14, 15, 16
Annex A Suspended Appendix A
Annex B Retained N.A.
Annex C Retained N.A.
For the avoidance of doubt, the suspension of the above provisions of the
ASADA 64-225 relate only to the sale and purchase of Wafers manufactured
using the C10 Process. In respect of all processes that are available in
the Company Fab after the Company Fab Start-Up Date, the original
provisions of the ASADA 64-225 shall apply unless otherwise mutually
agreed by the Parties in writing.
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4. COMPANY FAB START-UP DATE
4.1 The Parties shall mutually agree on the Company Fab Start-Up Date and the
ramp rate and capacity level of the Company Fab, based on the then
prevailing market conditions.
4.2 In consideration of the Company and CSM agreeing to include HP Purchase
Orders for C10 Process Wafers towards fulfilling the HP Wafer Purchase
Commitment as if such HP Purchase Orders were actually manufactured/loaded
in the Company Fab, HP hereby agrees as follows:-
(a) in determining the appropriate ramp rate and capacity level for the
Company Fab after the Company Fab Start-Up Date, due consideration
shall be given to the demand for capacity from the Company Fab in
order to ensure that there is not excessive capacity installed, for
eg. in the event that CSM requires capacity from the Company Fab but
HP does not, then the capacity to be installed in the Company Fab
shall be such quantity as is required by CSM, and HP's requirements
for C10 Process Wafer supply shall be fulfilled under this
Agreement; and
(b) in the event that additional share capital is required in connection
with the ramp of the Company Fab, then each of HP and CSM shall pay
its proportionate share of the committed capital contribution in
accordance with the JV Agreement, irrespective of whether HP or CSM
(as the case may be) requires capacity from the Company Fab at such
time.
5. SAVING AND INCORPORATION
5.1 Save as expressly varied by the terms of this Amendment Agreement (No. 1),
the terms and conditions of the ASADA 64-225 shall continue to be in full
force and effect in all other respects.
5.2 The ASADA 64-225 and this Amendment Agreement (No. 1) shall be construed
as one document and this Amendment Agreement (No. 1) shall be deemed to be
part of the ASADA 64-225. Where the context so permits, references in the
ASADA 64-225 and in this Amendment Agreement (No. 1) to the "Agreement"
shall be read and construed as references to the ASADA 64-225 as amended
and supplemented by this Amendment Agreement (No. 1).
6. GOVERNING LAW
This Amendment Agreement shall be governed by and construed in accordance
with the laws of Singapore.
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IN WITNESS WHEREOF the Parties have entered into this Amendment Agreement
(No. 1) as of the date first written above.
Signed by )
Xxxx Xxxxxxx Xxxxxxx )
General Manager )
CHARTERED SILICON PARTNERS PTE LTD ) /s/ Xxxx Xxxxxxx Xxxxxxx
in the presence of ---------------------------------
/s/ Xxxxxx Hon
---------------------------------
Name: Xxxxxx Hon
Title: Senior Manager, Legal
Signed by )
Xxxxxx Xxxxxx )
Senior Vice President, Business Operations )
CHARTERED SEMICONDUCTOR )
MANUFACTURING LTD ) /s/ Xxxxxx Xxxxxx
in the presence of ---------------------------------
/s/ Xxxxxx Hon
---------------------------------
Name: Xxxxxx Hon
Title: Senior Manager, Legal
Signed by )
Xxxxx Xxxxx )
CSP Program Manager, ICBD )
HEWLETT-PACKARD COMPANY ) /s/ Xxxxx Xxxxx
in the presence of ---------------------------------
/s/ Xxxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxxx Xxxx
Title: Corporate Counsel
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
APPENDIX A
THE COMPANY WAFER SUPPLY COMMITMENT
AND
THE HP WAFER PURCHASE COMMITMENT
Notwithstanding the delay of production in the Company Fab facility, the Parties
still intend to honor the spirit of the process for determining the Company
Wafer Supply Commitment and the HP Wafer Purchase Commitment as set out in the
ASADA 64-225.
COMPANY WAFER SUPPLY COMMITMENT AND HP WAFER PURCHASE COMMITMENT PROCESSES
The Parties shall meet quarterly to establish the required Company Wafer Supply
Commitment and the corresponding HP Wafer Purchase Commitment. HP shall be
entitled to request that the Company Wafer Supply Commitment quantity be equal
to **** of the *************** of the HP Forecast (for C10 Process Wafers) of
the ************* in the future, or in other words the future
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********* and upon the Company's and CSM's acceptance of such request, such
quantity shall become the Company Wafer Supply Commitment for such period.
By way of example, ****.
The CSM Supply Commitment available to the Company shall be equal to the Company
Wafer Supply Commitment. The Company Wafer Supply Commitment as referenced in
the table below shall be a ceiling of capacity which CSM shall be required to
reserve in its Fab 3 facility for the Company to enable the Company to fulfill
HP's demand for C10 Process Wafers, provided always that the Company Wafer
Supply Commitment reserved under this Appendix A shall not exceed ***** Wafers
out per month commencing in January 1999, unless otherwise agreed by CSM and HP
in writing. In the event that the HP Forecast indicates that HP will require
more than ***** Wafers out per month, HP and CSM shall meet in good faith to
determine if additional capacity is available to meet the HP demand beyond ****
Wafers out per month and to mutually agree on the terms relating to the
provision of such additional capacity. Such meeting shall be conducted during
the quarterly meetings held to establish the required Company Wafer Supply
Commitment.
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
The Company Wafer Supply Commitment with effect from the date of this Agreement
shall be as set out in the following table :-
MONTH COMPANY WAFER SUPPLY COMMITMENT
----- -------------------------------
October 1998 ****
November ****
December ****
January 1999 ****
February ****
March ****
April ****
May ****
June ****
July Determined by the Quarter-end Wafer Supply Commitment
process held in September 1998.
August Determined by the Quarter-end Wafer Supply Commitment
process held in September 1998.
September Determined by the Quarter-end Wafer Supply Commitment
process held in September 1998.
October Determined by the Quarter-end Wafer Supply Commitment
process held in December 1998.
November Determined by the Quarter-end Wafer Supply Commitment
process held in December 1998.
December Determined by the Quarter-end Wafer Supply Commitment
process held in December 1998.
January 2000 Determined by the Quarter-end Wafer Supply Commitment
process held in March 1999.
February Determined by the Quarter-end Wafer Supply Commitment
process held in March 1999.
March Determined by the Quarter-end Wafer Supply Commitment
process held in March 1999.
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
The HP Wafer Purchase Commitment with effect from the date of this Agreement
shall be as set out in the following table:-
MONTH HP WAFER PURCHASE COMMITMENT
----- ----------------------------
October 1998 ****
November ****
December ****
January 1999 ****
February ****
March ****
April ****
May ****
June ****
July Determined by the Quarter-end HP Wafer Purchase Commitment
process held in September 1998.
August Determined by the Quarter-end HP Wafer Purchase Commitment
process held in September 1998.
September Determined by the Quarter-end HP Wafer Purchase Commitment
process held in September 1998.
October Determined by the Quarter-end HP Wafer Purchase Commitment
process held in December 1998.
November Determined by the Quarter-end HP Wafer Purchase Commitment
process held in December 1998.
December Determined by the Quarter-end HP Wafer Purchase Commitment
process held in December 1998.
January 2000 Determined by the Quarter-end HP Wafer Purchase
Commitment process held in March 1999.
February Determined by the Quarter-end HP Wafer Purchase Commitment
process held in March 1999.
March Determined by the Quarter-end HP Wafer Purchase Commitment
process held in March 1999.
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
It is the intent of the Parties for HP to order and purchase the HP Wafer
Purchase Commitment quantities defined in the table above. In the event HP does
not order all the Company Wafer Supply Commitment quantities defined above, the
following shall apply:-
(a) Until such time as HP has ordered and CSM has produced for and shipped to
HP at least **** Wafers out per month on C10 Process, it is the intent of
the Parties for CSM to sell the excess in the Company Wafer Supply
Commitment over the HP Forecast for future ************* of the most
current HP Forecast. In the event that CSM wishes to sell the excess in
the Company Wafer Supply Commitment over the HP Forecast for future
************* of the most current HP Forecast, CSM shall provide HP the
first right of refusal to purchase such excess.
(b) After HP has ordered and CSM has produced for and shipped to HP at least
**** Wafers out per month on C10 Process, the provisions of Clause 2.8 of
this Agreement relating to the payment of liquidated damages in respect of
the HP Wafer Purchase Commitment shall apply.
In the event that the HP Forecast quantity for any period exceeds the then
current Company Wafer Supply Commitment for such period, the Parties shall meet
in good faith to determine if additional capacity is available to meet the HP
demand beyond the Company Wafer Supply Commitment. The HP Wafer Purchase
Commitment shall be modified only to the extent that additional Company Wafer
capacity is provided.
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