In a brief be aware revealed by AMD this afternoon as a part of an 8-Ok submitting with the US Securities and Change Fee, AMD is disclosing that the corporate has as soon as once more up to date its wafer provide settlement with long-time fab associate (and AMD fab spin-off) GlobalFoundries. Below the phrases of the newest wafer provide settlement, AMD and GlobalFoundries at the moment are committing to purchasing and supplying respectively $2.1 billion in wafers for the 2022 via 2025 interval, including a further yr and $500M in wafers to the earlier settlement.
As a fast refresher, AMD and GlobalFoundries final inked a brand new wafer provide settlement (WSA) again in Could of this yr. That settlement additional decoupled the 2 companies, ending any exclusivity agreements between the 2 and permitting AMD to make use of any fab for any node as they see match. None the much less, AMD opted to proceed shopping for 12nm/14nm wafers from GlobalFoundries, with the 2 companies inking a $1.6 billion settlement to purchase wafers for the 2022 via 2024 interval.
Formally labeled because the First Modification to the Amended and Restated Seventh Modification to the Wafer Provide Settlement, the newest modification is basically including one other yr’s value of manufacturing to the WSA. The up to date modification now goes via 2025, with AMD elevating their 12nm/14nm wafer orders by $500 million to $2.1 billion. AMD and GlobalFoundries should not disclosing the precise per-year wafer provide targets, however the settlement primarily binds GlobalFoundries to provide AMD will a bit over $500M in wafers yearly for the subsequent 4 years.
Together with yearly spending commitments, the up to date settlement additionally updates the value of stated wafers, in addition to the pre-payment necessities for 2022/2023. As with the precise variety of wafers, AMD isn’t disclosing any additional particulars right here.
|AMD/GlobalFoundries Wafer Share Settlement Historical past|
|Modification Date||December 2021||Could 2021||January 2019|
|Whole Order Worth||$2.1B||$1.6B||N/A|
(12nm and bigger)
It’s additionally value noting that, as with the earlier settlement, these targets are binding in each instructions. GlobalFoundries is required to allocate a minimal quantity of its capability to orders from AMD, and AMD in flip is required to pay for these wafers, whether or not they use this capability or not. Given the continued chip crunch, it will appear that AMD is hedging their bets right here, and locking in some extra provide a few years prematurely. Although given the value re-negotiation, it will be fascinating to see if AMD needed to comply with greater general costs with a purpose to safe a bigger provide of wafers from GlobalFoundries.
Previous that, AMD isn’t presently disclosing what they’ll be utilizing the extra wafer capability for – although they did make clear that it has nothing to do with acquisition goal Xilinx. AMD presently makes use of GlobalFoundries’ 12nm/14nm processes for early-generation Ryzen merchandise in addition to the I/O dies for AMD’s current-generation Ryzen and EPYC CPUs. Nonetheless below regular circumstances, we’d count on demand for these merchandise to be petering out, particularly by the 2024/2025 timeframe. The 12nm/14nm processes are already dated and are getting older nonetheless, so it’s unclear if that is AMD growing some backup plans to take care of the chip crunch, or if they’re anticipating demand for present 12/14 merchandise to persist (e.g. if they should produce their present long-term embedded merchandise in bigger numbers).
Baring any additional amendments to the WSA, the present settlement between AMD and GlobalFoundries will now expire on December 31st, 2025.