AMD released its financial results for the first quarter of 2012. The company reported 1.59 billion dollar revenue, -6% QoQ and -2% YoY, while recording a massive loss of $590 million (GAAP). The company actually achieved $138 million operating income and a profit of $92 million, but the GAAP results took a beating with a $703 million charge to GlobalFoundries as the company secured exclusivity for a certain 28 nanometer APU products for 2012, as well as established a baseline for wafer pricing agreement in 2013.

The charge clearly shows that the companies are battling to secure precious 28nm wafers, as they are expected to be the key growth driver during second half of 2012 and 2013.

Rory Read, CEO of AMD said that the company "delivered solid results in the first quarter as we remain focused on improving our execution, delivering innovative products, and building a company around a strategy to deliver strong cash flow and earnings growth. A complete top-to-bottom introduction of new APU offerings, combined with ample product supply resulting from continued progress with our manufacturing partners, positions us to win and grow."

When we take a look into released highlights, we see that the GPU revenue was actually down from 2011 by 7%, with operating income increasing to $34 million. It is obvious that AMD is now selling less graphics cards for higher selling price (ASP), which is a significant increase from $19 million from a year ago.

Still, the key aspect of this financial results is amending the Wafer Supply Agreement with GlobalFoundries, based on "take or pay" agreement. The company transferred the remaining share to GlobalFoundries in exchange "waiving the exclusivity agreement for AMD to manufacture certain 28nm APU products for a specified period." To us, it is a stark evidence that AMD cannot get enough 28nm wafers at TSMC for its upcoming APUs and the company had to react.

We will have an in-depth analysis of the analyst call as well. Stay tuned.