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AMD promises to spend $1.6bn on 12nm, 14nm chips from GlobalFoundries

Amid fears the global semiconductor crisis may last until 2023, AMD has opted to extend its purchase agreement with GlobalFoundries, giving it access to a greater proportion of the fabricator’s output.

AMD disclosed the existence of the deal in an 8-K regulatory filing submitted to the SEC earlier this week. The company has committed to buy $1.6bn worth of 12nm and 14nm node silicon wafers between now and December 31, 2024. It did not disclose a breakdown of the costs nor the exact quantity of output it had secured.

Should AMD fail to meet its purchase obligation, it has committed to pay GlobalFoundries a portion of the difference between its planned and actual spend. AMD has also agreed to pre-pay for an unspecified portion of these wafers in advance.

The terms of the deal also saw AMD released from the shackles of its previous exclusivity agreement with GlobalFoundries, allowing it to obtain wafers from other fabs. This seems prudent, given the soaring demand for PCs and GPUs witnessed over the past year, and the pent-up demand that remains to be met.

A spokesperson for AMD sent us this note about the deal:

Last month, analyst house Canalys reported the strongest month for PC shipments in almost two decades, with year-on-year growth of 55 per cent to 82.7m units. It predicted appetite would remain strong into the coming year, with increasingly confident small business customers set to be a major driver of sales.

AMD has emerged relatively unscathed from the global semiconductor crunch. Its latest financials showed revenue soaring by 93 per cent to $3.45bn, with sales of CPUs and GPUs spiking 46 per cent to $2.1bn. Enterprise revenue hit $1.3bn, up 287 per cent year-on-year.

Other sectors of the chip-consuming economy haven’t been as lucky, with car manufacturers particularly affected by the global semiconductor shortage. Analyst house Alix Partners has predicted the automotive sector will miss out on revenues of $110bn this year, up from the previous gloomy estimate of $61bn. ®


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