In a brief note released by AMD this afternoon as part of an 8-K application to the U.S. Securities and Exchange Commission, AMD reveals that the company has once again updated its tile deal with longtime fab partner (and AMD fab spin-off) GlobalFoundries. Under the terms of the latest tile delivery agreement, AMD and GlobalFoundries now commit to buying and delivering $ 2.1 billion in wafers from 2022 to 2025, adding another year and $ 500 million in wafers previous agreement.
As a quick refresh, AMD and GlobalFoundries last signed a new tile contract (WSA) back in May this year. That agreement further separated the two companies, ending all exclusivity agreements between them and allowing AMD to use any fab for any node as it deems appropriate. Nonetheless, AMD has decided to continue buying 12nm / 14nm tiles from GlobalFoundries, with the two companies signing a $ 1.6 billion contract to buy wafers for the period 2022-2024.
Officially classified as First Amendment to the Amended and Revised Seventh Amendment to the Waffle Supply Agreement, the latest amendment essentially adds another year of production to the WSA. The updated amendment is now valid until 2025, with AMD increasing its 12nm / 14nm wafer orders by $ 500 million to $ 2.1 billion. AMD and GlobalFoundries do not disclose specific annual targets for tile delivery, but the agreement essentially obliges GlobalFoundries to ship AMD tiles for just over $ 500 million each year for the next 4 years.
In addition to the annual consumption obligations, the updated agreement also updates the price of these wafers, as well as the requirements for advance payment for 2022/2023. As with a number of wafers, AMD does not reveal any additional details here.
|AMD / GlobalFoundries Wafer Share Agreement History|
|Modified date||December 2021||May 2021||January 2019|
|Total order value||$ 2.1 billion||$ 1.6 billion||N / A|
(12nm and larger)
It is also worth noting that, as with the previous agreement, these objectives are binding in both directions. GlobalFoundries is obliged to allocate the minimum amount of its capacity for orders from AMD, and AMD in turn is obliged to pay for these tiles, regardless of whether they use this capacity or not. Given the current drop in chips, AMD seems to be protecting its bets here and concluding an additional offer a few years in advance. Although given the renegotiation of the price, it would be interesting to see if AMD has to agree to higher overall prices to ensure a higher supply of wafers than GlobalFoundries.
After that, AMD is currently not revealing what it will use the extra capacity of the wafer for – although they clarified that it has nothing to do with the goal of acquiring Xilinx. AMD currently uses GlobalFoundries 12nm / 14nm processes for early-generation Ryzen products, as well as I / O matrices for AMD’s current-generation Ryzen and EPYC CPUs. However, under normal circumstances, we would expect demand for these products to be reduced, especially by the 2024/2025 timeframe. 12nm / 14nm processes are already outdated and still getting older, so it is unclear whether this AMD is developing some backup plans to deal with chip reduction, or expect demand for current 12/14 products to continue to exist (e.g. they must produce their current long-term embedded products in greater numbers).
Without any further amendments to the WSA, the current contract between AMD and GlobalFoundries now expires on December 31st, 2025.
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