First Amended and Restated PARTICIPATION AGREEMENT

Exhibit 10.1

EXECUTION VERSION

First Amended and Restated

PARTICIPATION AGREEMENT

Between

INTERNATIONAL BUSINESS MACHINES CORP.

And

ADVANCED MICRO DEVICES, INC.

Dated

August 15, 2008

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

This Participation Agreement (“Participation Agreement”) is made effective as of the twenty-fifth (25 ^th ) day of June, 2008 (hereinafter referred to as the “Effective Date”) by and between International Business Machines Corporation (“IBM”) , incorporated under the laws of the State of New York, U.S.A. and having an office for the transaction of business at 2070 Route 52, Hopewell Junction, NY 12533, U.S.A, and Advanced Micro Devices, Inc. (“AMD” or “Company”) , incorporated under the laws of the State of Delaware, U.S.A, and having an office for the transaction of business at One AMD Place, Sunnyvale, CA 94088-3453 for the Development Projects referenced on Exhibit A attached hereto (collectively, the “Development Projects”).

WHEREAS , IBM and Company previously entered into the Third Amendment and Restatement of the “S” Process Development Agreement as of December 28, 2002 (hereinafter “SPDA”) to develop certain SOI process technologies;

WHEREAS , IBM is pursuing or intends to pursue each of the Development Projects alone or in conjunction with one or more Participating Parties, as such Development Projects are more particularly described in the Project Agreements;

WHEREAS , Company seeks to participate as a Participating Party in each of the Development Projects with IBM and the other applicable Participating Parties; and

WHEREAS , IBM seeks to permit such participation in each of the Development Projects based upon the terms and conditions set forth in (i) the applicable Project Agreement (including the Master Terms), which governs matters between and among all Parties, and (ii) this Participation Agreement, which governs certain supplemental matters between IBM and Company.

NOW THEREFORE , in consideration of the premises and mutual covenants contained herein, as well as for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, IBM and Company agree as follows.

1. Additional Definitions. Unless expressly defined and used with an initial capital letter in this Participation Agreement, the Project Agreement, or the Master Terms, words shall have their normally accepted meanings. Each of the following terms has the meaning ascribed to it below:

“Baseline Fees” is defined in Section 5(a).

“BEOL” (Back End of Line) shall mean those aspects of Background Know-How and Specific Results that are directed to methods and processes of interconnecting the source, gate, or drain electrodes of FET transistors formed on a wafer, including initial passivation of such FET transistors with a dielectric, up to and including polyimide passivation and final via formation but not including Packaging Technology. For the avoidance of doubt, “BEOL” shall not include local interconnects made of tungsten.

“Company Participation Period(s)” is defined in Section 3.

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

“Derivative Process(es)” shall have the meaning ascribed to it in Section 7(f).

“Development Projects” means those particular Development Projects identified on Exhibit A.

“Foundry Company(ies)” means an entity having a majority of its revenue arising from the sale of Integrated Circuits wherein all the following conditions are met: (i) the design, or masks and/or mask build data, for such Integrated Circuit product are provided to the Foundry Company from a party other than the Foundry Company; (ii) such Foundry Company played no substantial role in any phase of the design of such product (except for providing standard design libraries, design enablement tools or other intellectual property to the party other than the Foundry Company to specifically assist with the design of the product); and (iii) such Foundry Company is contractually bound to manufacture such product solely for, and to sell such product solely to, such party other than the Foundry Company or its distributor or other recipient solely for the benefit of such party other than the Foundry Company. Foundry Company also includes any other entity that has as its primary business the manufacture of Industry Standard Integrated Circuits, wherein at least fifty percent (50%) of the ownership interest in such entity is held by a Foundry Company (as defined in the first sentence of this paragraph), and wherein such Foundry Company and no other entity provides day-to-day control and decision-making authority as to the manufacturing operations of such entity.

“Foundry Entity” means a Third Party entity which derived more than [****] dollars of revenue from sale of foundry products (defined as for Foundry Products except with such entity named in place of Company) in fiscal year 2007.

“Foundry Product” means an Integrated Circuit wherein all the following conditions are met: (i) the design, or masks and/or mask build data, for such Integrated Circuit product are provided to Company from a Third Party; (ii) Company played no substantial role in any phase of the design of such product (except for providing standard design libraries, design enablement tools or other intellectual property to the Third Party to specifically assist with the design of the product); and (iii) Company is contractually bound to manufacture such product solely for, and to sell such product solely to, such Third Party or its distributor or other recipient solely for the benefit of such Third Party.

“High Performance Information” means aspects of Background Know-How or Specific Results of any one or more Development Projects, except for Industry Standard Information.

“Industry Standard Development Projects” means the Development Projects pursuant to any of the following Project Agreements:

(1) [****]; or

(2) [****]; or

(3) [****]; or

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

(4) [****];

(5) [****]; or

(6) [****].

“Industry Standard Information” means Background Know-How or Specific Results of any Industry Standard Development Project and Background Know-How or Specific Results of any other Development Projects other than Protected High Performance Information selected by IBM and Company pursuant to Section 7(f).

“JMP” means a Third Party who is licensed by Company pursuant to Section 7(a) of this Participation Agreement to manufacture Integrated Circuits in a joint manufacturing facility utilizing the Background Know-How and Specific Results of any Development Project (excluding High Sensitivity Pre-T0 Information).

“Key Information” means Industry Standard Information that enables a Third Party to engage in installation of the unit process modules, process integration flow, or yield enhancement activities of the relevant technology excluding information that enables a licensee of such Key Information to 1) sign and confirm that a license exists, 2) present an implementation roadmap for the licensed technology, and 3) build and equip a manufacturing facility, excluding specific recipe details.

“Master Terms” means the Master IBM Joint Development Terms and Conditions that are incorporated by reference into the Project Agreements.

“Net Sales” means the net revenue recorded by Company (including its Wholly Owned Subsidiaries) with respect to the first sale or other transfer of unbumped product wafers less (a) shipping, (b) insurance, and (c) sales, value added, use or excise taxes, to the extent to which such items (a), (b) or (c) are actually paid or allowed, and less allowances to the extent they are actually allowed. If such wafers are sold or otherwise transferred in a higher level of assembly or with further processing or in the course of a transaction that includes other products or services with no separate bona fide price to be charged for such wafers, the applicable Net Sales for the purpose of calculating Revenue Based Fees shall be the fair market value of the unbumped wafers.

“Participation Effective Date” means, for each Development Project, the earlier date referenced under Company Participation Period in Exhibit A for the respective Development Project.

“Participation Agreement” means this “First Amended and Restated Participation Agreement between International Business Machines Corporation and Advanced Micro Devices, Inc.”

“Project Agreement” means the Project Agreement governing the respective Development Project, as referenced on Exhibit A.

“Protected High Performance Information” is defined in Section 7(f).

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

“Revenue Based Fees” is defined in Section 5(b).

“ SOI Wafer” shall mean a single-crystal silicon wafer bearing a horizontally-disposed isolating silicon dioxide (SiO ₂ ) layer, in turn bearing a single-crystal silicon layer or a polysilicon layer, which is separated from the underlying silicon by the silicon dioxide layer and in which one or more active or passive integrated circuit structures are formed.

“SPDA” is defined in the recitals of this Participation Agreement.

2. Binding Contract; Relationship to the SPDA.

(a) By executing this Participation Agreement and the respective “Participating Party Notification” attached as Exhibit C and upon Company board approval, such approval to be received no later than September 15, 2008 (absent such approval this Agreement shall be null and void ab initio and any Confidential Information received hereunder shall be destroyed), (i) Company joins each of the respective Development Projects as a Participating Party, (ii) Company and the other Participating Parties are each directly contracted to IBM and to each other based upon the terms and conditions of the respective Project Agreement (including the Master Terms and any language herein applicable to the respective Project Agreements), without the need for any additional documentation or signatures by any Party, and (iii) Company is estopped from contesting its direct privity of contract with the other Participating Parties and with IBM on such referenced terms and conditions. Exhibit D provides a list of the Participating Parties in each of the Development Projects as of the Participation Effective Date. IBM will record updates to this list on the respective Project Database.

(b) Company and IBM recognize that certain of their bilateral development effort pursuant to the SPDA must be replaced in order to facilitate IBM and Company’s continued development with other Participating Parties pursuant to the applicable Development Projects. Accordingly, IBM and Company agree that, as of the Participation Effective Date, the development activities pursuant to the SPDA, or portions thereof, listed in Exhibit E to this Participation Agreement permanently end and such development recommences pursuant to such Project Agreements and this Participation Agreement. The SPDA continues in full force and effect, however the parties hereto contemplate terminating the SPDA, in part, in the future subject to negotiating which of the SPDA’s provisions will survive. Notwithstanding the foregoing, as of the date of the last signature hereto, for the Development Projects listed in Exhibit A this Agreement shall supercede the provisions of Sections 5.1-5.3, 5.6, 5.7, 5.8, 5.10, 5.11 and 4.6 of the SPDA.

(c) The language in Exhibits F and G attached hereto contain additional Company-specific terms and conditions agreed to by IBM and Company. Such terms and conditions are incorporated herein and form an integral part of the Agreement.

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

3. Company Participation Periods; Term. Company shall participate and is only authorized to participate in the Development Project(s), commencing on the Participation Effective Date and continuing for the applicable periods for the Project Agreements referenced in Exhibit A attached hereto (“Company Participation Period(s)”), regardless of whether the applicable Project Term extends beyond a Company Participation Period for such Development Project. The term of this Participation Agreement shall commence on the Effective Date and, unless terminated prior to expiration as set forth elsewhere in the Agreement, shall remain in force until the earlier of (i) expiration or earlier termination of all Project Agreements referenced on Exhibit A, or (ii) December 31, 2015.

4. Company Staffing. Company shall provide IBM with Representatives to work on the Development Projects in accordance with the minimum staffing levels detailed on Exhibit B attached hereto.

5. Company Contributions and Other Payments . In consideration for Company’s right to participate in the Development Projects commencing as of the Participation Effective Date, Company shall timely pay IBM quarterly development fees which are the greater of Baseline Fees pursuant to subsection (a) below or Revenue Based Fees pursuant to subsection (b) below. Company’s contributions will be calculated during the second calendar quarter of each year and be in effect for the subsequent four calendar quarters. Beginning in the fourth calendar quarter of 2008, all such payments shall be made within forty-five (45) days after receipt by Company of a quarterly invoice from IBM but no earlier than on the fifteenth day of the first month of each calendar year quarter. For the third calendar quarter of 2008, such payments shall be made within forty-five (45) days after receipt by Company of an invoice from IBM but in no case later than September 30, 2008.

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

(b) Revenue Based Fees shall be calculated based on Company’s Net Sales during Company’s preceding fiscal year of products or services manufactured using, embodying, derived from or otherwise based upon any Background Know-How or Specific Results of a Development Project as follows:

(i) [****] percent ([****]%) of Net Sales for products, consumed by Advanced Micro Devices, Inc., or sold or transferred to Advanced Micro Devices, Inc. by any permitted assignee hereunder of Advanced Micro Devices, Inc., based upon substantially all of the High Performance Information derived from the relevant high performance Development Project, plus;

(ii) [****] percent ([****]%) of Net Sales (excluding for clarity Net Sales from (i) above) for products, consumed by Advanced Micro Devices, Inc., or sold or transferred to Advanced Micro Devices, Inc. by any permitted assignee hereunder of Advanced Micro Devices, Inc., based upon Industry Standard Information, plus;

(iii) [****] percent ([****]%) of Net Sales for products based upon Specific Results or Background Know-How of any Development Project and sold to, transferred to or consumed by any third party who is licensed by IBM to manufacture products using Specific Results or Background Know-How of the same Development Project, plus;

(iv) [****] percent ([****]%) of Net Sales for products based upon Specific Results or Background Know-How of any Development Project and sold to, transferred to or consumed by any third party who is licensed by IBM to Specific Results or Background Know-How of the same Development Project wherein such license does not include the right to manufacture products using such Specific Results or Background Know-How, plus;

(v) [****] percent ([****]%) of Net Sales for products sold to, transferred to or consumed by any other third party.

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

The percentage values stated above in 5(b)(i) through (v) will prospectively change to [****], [****], [****], [****], and [****] percent, respectively, should Company merge with or acquire (including reverse merger or reverse acquisition) [****] (“[****]”) while [****] is a Participating Party in a major node IBM Development Project or within nine (9) months after [****] ceases to be a Participating Party in a major node IBM Development Project.

For avoidance of doubt each product consumed by, sold to or transferred to Advanced Micro Devices, Inc. or any third party shall fall under only one revenue category under subsections 5.(b)(i) through (v) above for purposes of calculating Revenue Based Fees.

Company’s quarterly Revenue Based Fees shall be one quarter of the amount indicated above. For avoidance of doubt, the establishment of a half-node process technology Development Project(s) and Company’s participation in such project(s) will not increase Company’s fee schedule.

Company’s total yearly Revenue Based Fees in any given year shall not exceed two (2) times the corresponding yearly amount of Company’s Baseline Fees indicated above. Should Company merge with or acquire (including reverse merger or reverse acquisition) [****] (“[****]”) then Company’s total yearly Revenue Based Fees in that year and any subsequent year shall not exceed three (3) times the corresponding yearly amount of Company’s Baseline Fees indicated above.

To the extent it has the right to do so, which right IBM will make a good faith effort to obtain, IBM shall promptly notify Company after it enters into, or terminates or alters, any relevant licensing arrangement affecting the appropriate categorization of transfers above which would allow Company to correctly calculate Revenue Based Fees under subsections (iii) and (iv) above. Company shall not be liable for any underpayments which result from IBM’s failure to provide such notification. No later than March 31 of each calendar year, Company shall provide to IBM a written statement containing Company’s Net Sales during the preceding fiscal year in each of the above categories, the calculated percentages according to the above and the total amount of Revenue Based Fees. Company shall maintain a complete, clear and accurate record of the quantity of products sold or otherwise transferred or consumed and any other relevant information to the extent it is required to determine whether they are reporting the correct Revenue Based Fees hereunder. To ensure compliance with the terms and conditions of this Agreement, IBM shall have the right to audit all relevant accounting, technical and sales books and records of Company. The audit will be conducted by a mutually acceptable audit firm, and shall be conducted following reasonable prior written notice (at least forty-five (45) days in advance) during regular business hours at an office where such records are normally maintained and in such a manner as not to interfere with Company’s normal business activities and shall be restricted only to those records necessary to verify Company’s obligations hereunder. The audit report provided to IBM may only include

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

the information necessary to determine whether or not any underpayment or overpayment exists, and if it exists, the amount of such underpayment or overpayment. IBM shall instruct the auditor to include only business information in the audit report to IBM. IBM shall use the business information reported by the auditor only for the purpose of determining royalty payments and for no other purpose. In no event shall audits be made hereunder more frequently than once in every twelve (12) months and the audit shall not cover any records from a period of time previously audited. If any audit should disclose any underpayment or overpayment, the owing Party shall within forty-five (45) days pay the difference. The cost of such audit will be borne by IBM. Company shall be provided with a copy of the audit report within a reasonable period of time after its completion. The independent audit firm shall not be hired on a contingent fee basis and Company shall have the right to require such audit firm to sign a confidentiality agreement sufficient to protect Company’s confidential information.

(c) Company shall be liable for interest on any overdue payment under this Agreement commencing on the date such payment becomes due at an annual rate equal to eighteen percent (18%) per year. If such interest rate exceeds the maximum legal rate in the jurisdiction where a claim therefor is being asserted, the interest rate shall be reduced to such maximum legal rate.

(d) IBM shall apply the payments of this Section 5 towards Development Project costs and not for any license rights granted by any Party to any other Party for Background Know-How.

(e) In consideration for the licenses granted to Company to Background Know-How of the 32nm Bulk Industry Standard Semiconductor Process Technology and 32nm Bulk-Industry Standard Enablement Technology Development Projects, Company shall pay to IBM [****] dollars ($[****]) according to the following schedule: $[****] on or before September 30, 2008; $[****] on or before December 30, 2008, $[****] on or before January 15, 2009; $[****] on or before April 15, 2009 and $[****] on or before July 15, 2009; which obligation shall be irrevocable and which payment when made shall be non-refundable. The first two payments under this section will be due and payable on the respective dates specified with this Agreement serving as the invoice. All subsequent payments shall be made within forty-five (45) days after receipt by Company of a quarterly invoice from IBM; however, in no case will Company be required to payment before the dates specified above.

(f) Each Party shall bear and pay all taxes (including, without limitation, sales and value added taxes) imposed upon it by the national government or political subdivision thereof, of any country in which they are doing business as a result of the existence of this Agreement or the exercise of its rights hereunder. Except as expressly provided in this Agreement, neither Party shall be entitled to any payment, cost reimbursement, or other compensation from the other for services, deliverables and rights granted to the other Party hereunder. Each Party shall bear all its own expenses incurred in the performance of this Agreement. All payments due hereunder shall be paid in United States dollars.

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

6. Limitation Amount. Notwithstanding the Limitation Amount provided in the Project Agreement, the Limitation Amount as between IBM and Company for all Development Projects in the aggregate is [****] dollars.

7. Confidentiality; Information Transfers; Licenses to Background Know-How.

(a) Joint Manufacturing Rights. IBM hereby grants to Company the right to disclose and sublicense Background Know-How and Specific Results of any Development Project (excluding High Sensitivity Pre-T0 Information) subject to the following requirements. Company may sublicense no more than two (2) JMPs for a maximum of a total of two (2) joint manufacturing facilities with a combined maximum capacity of producing [****] 300 mm wafers per month for such technology consumed by, or supplied to the JMPs. Said combined maximum volume amount for a specific technology will apply until the confidentiality period for that specific technology expires. Company must own greater than fifty percent (50%) interest (defined in the same manner as for Subsidiary) in the joint manufacturing facility and the JMP own the remaining interest except for any interest owned by a government entity or institutional investor (“Inactive Owners”). The Inactive Owners shall not be in the business of manufacturing Integrated Circuits and will not be granted access to any Key Information. Company and the JMP will provide day-to-day control and decision making authority as to the manufacturing operations of their joint manufacturing facility. The JMP will derive no more than fifty percent (50%) of its total revenue from foundry related business. The JMP will not be based in Asia (which for purposes of this Section 7(a) Asia does not include Japan, Korea or Singapore). The JMP will not have the right to use the licensed technology to provide foundry services. The JMP will not have the right to use the licensed technology other than in the joint manufacturing facility. The JMP will not be any party who contracts with IBM to conduct joint development of semiconductor process technology any sooner than 18 months after the later termination of either the IBM joint development or joint manufacturing partner relationship between IBM and such aforementioned company. The joint manufacturing facility will not be located in Asia. Notwithstanding the foregoing, [****] may be a JMP.

If Company builds or has built a manufacturing facility for the purpose of exercising Company’s rights and performing Company’s obligations under the immediately preceding paragraph of this Section 7(a) and Company and a first or second JMP cannot utilize all of the combined maximum capacity of [****] 300 mm wafers per month, then six (6) months prior to start of installation of any process technology for volume production for any unutilized combined maximum capacity, and yearly thereafter for any uncontracted, unutilized combined maximum capacity, Company will so notify IBM in writing, and IBM will have the right of first refusal of the unutilized combined maximum capacity at a price to IBM of the then current average market price for such wafers less twenty percent (20%), but in no event will such price to IBM be greater than that offered by Company to its most favored customer under substantially similar terms and conditions. For the capacity that IBM refuses, Company may sell foundry wafers

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential treatment has been requested with respect to the omitted portions.

EXECUTION VERSION

including Foundry Products subject to this Section 7(a) to Third Parties (other than those that are not permitted to be a JMP) provided that: (i) all such sales are made more than two (2) years after the applicable L2 for the technology in which such wafers are manufactured and (ii) all such sales shall be included in the calculation of Revenue Based Fees under Section 5(b). The foregoing notification obligation will cease when the confidentiality obligation for a technology expires.

(b) Have-Made Rights. Except as expressly provided herein, Company shall have no right to disclose or sublicense Background Know-How or Specific Results of any Development Project for the purpose of having products made by a Third Party in a manufacturing process whose minimum critical dimension is less than or equal to that of the 32nm High Performance Semiconductor Process Technology Development Project or the 32nm Industry Standard Semiconductor Process Technology Development Project.

(c) Third Party Joint Development. Except as specifically set forth in a Project Agreement or in this Participation Agreement, Company shall have no right to disclose or sublicense Background Know-How or Specific Results of any Development Project to any Third Party for the purpose of engaging in joint development of semiconductor process or design enablement technology with such Third Party.

(d) Foundry Entities. IBM shall not disclose to a Foundry Entity any Key Information prior to one (1) year after the applicable Qualification. Furthermore, IBM shall not allow a Foundry Entity to become a Participating Party in any Development Project to which Company is a Participating Party or in which Development Project Company is actively in negotiation with IBM to become a Participating Party until six (6) months after IBM has offered participation in such Development Project to Company or immediately upon Company declining such participation, whichever is earlier.

(e) Foundry Services. Notwithstanding anything to the contrary in this Agreement, Company may use High Performance Information to produce Foundry Products or produce Foundry Products on SOI Wafers only for sale, lease or transfer to IBM, other Participating Parties in the Development Project from which such High Performance Information is derived, licensees of such High Performance Information from IBM or sale, lease or transfer to Advanced Micro Devices, Inc. from any subsequent assignee. For avoidance of doubt, Industry Standard Information may be used to produce Foundry Products for any Third Party, subject to all the terms and conditions of this Agreement including Section 5(b) of this Participation Agreement.

(f) Derivative Processes and Protected High Performance Information.

The license granted to Company in Section 8.1 of the Master Terms shall include the right for Company to utilize one or more aspects of Industry Standard Information for the development and qualification of its own, proprietary derivative process(es) (“Derivative Process(es)”) and for developing, engineering, manufacturing, using, marketing, selling, servicing and otherwise disposing of Integrated Circuits utilizing such Derivative Process(es), other than Integrated Circuits created using High Performance Information, such Integrated Circ