January 27, 2022

AMD and GlobalFoundries Wafer Provide Settlement Up to date As soon as Extra: Now $2.1B By means of 2025


In a brief observe printed by AMD this afternoon as a part of an 8-Ok submitting with the US Securities and Alternate 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 by means of 2025 interval, including an extra 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 by means of 2024 interval.

Formally categorized 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 by means of 2025, with AMD elevating their 12nm/14nm wafer orders by $500 million to $2.1 billion. AMD and GlobalFoundries usually are not disclosing the precise per-year wafer provide targets, however the settlement primarily binds GlobalFoundries to produce AMD will a bit over $500M in wafers yearly for the following 4 years.

Together with yearly spending commitments, the up to date settlement additionally updates the worth of mentioned 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
Begin Date 2022 2022 2019
Finish Date 2025 2024 2024
GlobalFoundries Exclusivity? No No Partial

(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 continuing chip crunch, it could appear that AMD is hedging their bets right here, and locking in some further provide a few years upfront. Although given the worth re-negotiation, it could be fascinating to see if AMD needed to conform to greater total 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. Nevertheless beneath regular circumstances, we’d anticipate 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 cope with 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.

On December 23, 2021, Superior Micro Units, Inc. (the “Firm”) entered into the First Modification (the “Modification”) to its Amended and Restated Seventh Modification to the Wafer Provide Settlement (the “A&R Seventh Modification”) with GLOBALFOUNDRIES Inc. (“GF”) to increase GF’s capability dedication and wafer pricing to the Firm.

The Modification modifies sure phrases of the Wafer Provide Settlement relevant to wafer purchases on the 12 nm and 14 nm know-how nodes by the Firm for the interval commencing on December 23, 2021 and persevering with by means of December 31, 2025. GF agreed to extend the minimal annual capability allocation to the Firm for years 2022 by means of 2025. Additional, the events agreed to new pricing and annual wafer buy targets for years 2022 by means of 2025, and modified the pre-payments agreed to by the Firm to GF for these wafers in 2022 and 2023. The Modification doesn’t have an effect on any of the prior exclusivity commitments that have been eliminated beneath the A&R Seventh Modification. The Firm continues to have full flexibility to contract with any wafer foundry with respect to all merchandise manufactured at any know-how node. The Firm presently estimates that it’ll buy roughly $2.1 billion of wafers in whole from GF for years 2022 by means of 2025 beneath the Modification.

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