Originally posted by stingerman:
I'll summarize the terms of Apple's agreement with IBM since the original is too long to post here:
- Apple is required to supply IBM with _rolling_ product demand forecasts it needs by the end of the month for the following month. (Apple can adjust the forecasts up to the 10th of the following month.)
- Apple places Purchace orders priced on the already agreed upon _unit_ price. (So yields affect IBM price wise)
- If IBM is not confident in the accuracy of the rolling forecasts, it must escalate the matter to both IBM and Apple upper Executive management to resolve.
- IF IBM cannot fulfill a PO in the time Apple specified within the agreed upon time periods, IBM must escalate the matter to Apple and IBM upper Executive Management to resolve.
- Verbatim on Delivery:
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4.3 If IBM or its Plant foresees any supply constraint with respect to an accepted Purchase Order, IBM will provide prompt notice to Apple and, if the Purchase Order was placed by someone other than Apple, to the Authorized Purchaser or Designee who placed the Purchase Order. Apple and IBM will then discuss likely shipment recovery plans, and if they are unable to do so to Apples satisfaction, the parties will immediately escalate the issue to the IBM and Apple executives designated for such purpose pursuant to Section 21.2 and the parties will use reasonable efforts to promptly resolve the discrepancy. If IBMs supply of the Product and / or Services ordered by Authorized Purchasers or Designees and accepted by IBM hereunder becomes constrained [**] IBM may reduce the quantities of Products and / or Services to be supplied to Authorized Purchasers or Designees.
4.4 If IBM or its Plant foresees any delivery delay with respect to an accepted Purchase Order, IBM will provide prompt notice to Apple and, if the Purchase Order was placed by someone other than Apple, to the Authorized Purchaser or Designee who placed the Purchase Order. Apple and IBM will then discuss likely shipment recovery plans, and if they are unable to do so to Apples satisfaction, the parties will immediately escalate the issue to the IBM and Apple executives designated for such purpose pursuant to Section 21.2 and the parties will use reasonable efforts to promptly resolve the delay.
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- Verbatim on Costs of processor
(the ** were stricken out due to confidentiality agreement, but basically IBM is eating the yield problem costs.) :
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6.5 [**] Costs. IBM will be solely responsible for all [**] incurred in connection with [**] of the microprocessor Products set forth on Exhibit 4, and under no circumstances will Apple be liable to IBM for any such costs (except to the extent such costs were included in the agreed purchase price of a Product and Apple is liable for that purchase price pursuant to this Agreement without reference to this Section 6.5).
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Other important points from the contract, IBM can resell "standard" PowerPC processors to others but cannot resell to others "Custom" processors and ASICs designed by Apple using IBM technology. (ie, if Apple designs their own SOC 970FX with other integrated components, IBM could not resell Apple's specific designs to others.)
- Regarding FREQUENT FAILURES:
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14.2 IBM will promptly notify Apple if IBM believes that a Product contains a defect that could result in Failed Units exceeding the Failure Threshold. IBM may stop shipments of all such Products [**] while IBM and Apple analyze the defect and discuss whether shipments should resume. If the Product contains such a defect, IBM will use diligent efforts to promptly: (i) cure such defect and resume shipments as quickly as possible; or (ii) make available a replacement Product that meets the agreed specifications for the Product but does not contain such a defect. [**] The modified or replacement Products shall be fully warranted as set forth in Sections 13 and this Section 14 once qualified by Apple. If Apple provides IBM written instructions acknowledging IBMs notice of a defect but instructing IBM to resume shipments in advance of a cure or replacement, IBM will resume such shipments as quickly as possible; provided, however that: (a) Apples instructions will not relieve IBM of its obligation to cure the defect or make a replacement part available as set forth above; and (b) uncured Products shipped pursuant to such written instructions will be shipped without warranty, express or implied, or Frequent Failure protection with regard to such defect or any related defect rendered undetectable due to the presence of such defect.
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As far as compensation to Apple for failed components: (a)If Apple agrees, IBM can give it a replacement or refund Apple the full price it paid. Or, (b) [**Confidential]
Beyond that, the contract covers processors and ASICs that IBM will be delivering for their Pro, Consumer, Server, pro Portable, consumer-portable including the U3 and the upcoming "U3 Lite".
(A lot of the important stuff was asterisked out but I was able to post what is now in the public domain.)