AMD and GlobalFoundries Wafer Supply Agreement Updated Once More: Now $2.1B Through 2025by Ryan Smith on December 23, 2021 6:00 PM EST
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In a short note published by AMD this afternoon as part of an 8-K filing with the US Securities and Exchange Commission, AMD is disclosing that the company has once again updated its wafer supply agreement with long-time fab partner (and AMD fab spin-off) GlobalFoundries. Under the terms of the latest wafer supply agreement, AMD and GlobalFoundries are now committing to buying and supplying respectively $2.1 billion in wafers for the 2022 through 2025 period, adding an additional year and $500M in wafers to the previous agreement.
As a quick refresher, AMD and GlobalFoundries last inked a new wafer supply agreement (WSA) back in May of this year. That agreement further decoupled the two firms, ending any exclusivity agreements between the two and allowing AMD to use any fab for any node as they see fit. None the less, AMD opted to continue buying 12nm/14nm wafers from GlobalFoundries, with the two firms inking a $1.6 billion agreement to buy wafers for the 2022 through 2024 period.
Officially classified as the First Amendment to the Amended and Restated Seventh Amendment to the Wafer Supply Agreement, the latest amendment is essentially adding another year’s worth of production to the WSA. The updated amendment now goes through 2025, with AMD raising their 12nm/14nm wafer orders by $500 million to $2.1 billion. AMD and GlobalFoundries are not disclosing the specific per-year wafer supply targets, but the agreement essentially binds GlobalFoundries to supply AMD will a bit over $500M in wafers every year for the next 4 years.
Along with yearly spending commitments, the updated agreement also updates the price of said wafers, as well as the pre-payment requirements for 2022/2023. As with the specific number of wafers, AMD isn’t disclosing any further details here.
|AMD/GlobalFoundries Wafer Share Agreement History|
|Amendment Date||December 2021||May 2021||January 2019|
|Total Order Value||$2.1B||$1.6B||N/A|
(12nm and larger)
It’s also worth noting that, as with the previous agreement, these targets are binding in both directions. GlobalFoundries is required to allocate a minimum amount of its capacity to orders from AMD, and AMD in turn is required to pay for these wafers, whether they use this capacity or not. Given the ongoing chip crunch, it would seem that AMD is hedging their bets here, and locking in some additional supply a couple of years in advance. Though given the price re-negotiation, it would be interesting to see if AMD had to agree to higher overall prices in order to secure a larger supply of wafers from GlobalFoundries.
Past that, AMD isn’t currently disclosing what they’ll be using the additional wafer capacity for – though they did clarify that it has nothing to do with acquisition target Xilinx. AMD currently uses GlobalFoundries’ 12nm/14nm processes for early-generation Ryzen products as well as the I/O dies for AMD’s current-generation Ryzen and EPYC CPUs. However under normal circumstances, we would expect demand for those products to be tapering off, especially by the 2024/2025 timeframe. The 12nm/14nm processes are already dated and are getting older still, so it’s unclear if this is AMD developing some backup plans to deal with the chip crunch, or if they are expecting demand for current 12/14 products to persist (e.g. if they need to produce their current long-term embedded products in larger numbers).
Baring any further amendments to the WSA, the current agreement between AMD and GlobalFoundries will now expire on December 31st, 2025.
On December 23, 2021, Advanced Micro Devices, Inc. (the “Company”) entered into the First Amendment (the “Amendment”) to its Amended and Restated Seventh Amendment to the Wafer Supply Agreement (the “A&R Seventh Amendment”) with GLOBALFOUNDRIES Inc. (“GF”) to extend GF’s capacity commitment and wafer pricing to the Company.
The Amendment modifies certain terms of the Wafer Supply Agreement applicable to wafer purchases at the 12 nm and 14 nm technology nodes by the Company for the period commencing on December 23, 2021 and continuing through December 31, 2025. GF agreed to increase the minimum annual capacity allocation to the Company for years 2022 through 2025. Further, the parties agreed to new pricing and annual wafer purchase targets for years 2022 through 2025, and modified the pre-payments agreed to by the Company to GF for those wafers in 2022 and 2023. The Amendment does not affect any of the prior exclusivity commitments that were removed under the A&R Seventh Amendment. The Company continues to have full flexibility to contract with any wafer foundry with respect to all products manufactured at any technology node. The Company currently estimates that it will purchase approximately $2.1 billion of wafers in total from GF for years 2022 through 2025 under the Amendment.
Source: AMD IR
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ballsystemlord - Thursday, December 23, 2021 - linkThat might be for AMD's Motherboard chipsets.
ballsystemlord - Thursday, December 23, 2021 - linkIt could also be for their PRO line of CPUs which have a guaranteed timeline of availability. Their current offerings were supposed to have a 7nm IO die, but it has remained on 14nm.
nandnandnand - Friday, December 24, 2021 - linkIf they can make Monet quad-core Zen 3 on 12LP+, that would sell in cheap laptops or mini PCs.
Xajel - Sunday, December 26, 2021 - linkDoing Zen3 on 12LP+ will mean a redesign for the 12LP+ process, which is almost like a complete redesign to optimise it for this specific process. Which will require big $$$ sum, which doesn't make sense if they're targeting cheap laptops.
nandnandnand - Monday, December 27, 2021 - linkI didn't make up the rumor. If they put something on 12LP+, they get to sell more products than they can if they are on TSMC only. And Monet as described could sell for a long time because it would be sufficient for cheap laptops or mini PCs. It could replace the likes of the A6-9220C which is a 2019 Excavator product on 28nm.
Josh128 - Monday, December 27, 2021 - linkIt would make more sense to produce more RX580 and Vega 64 GPUs. Someone will buy them, for sure.
Alexvrb - Sunday, January 2, 2022 - linkHmm... supply for leading processes will remain strapped, so it does make some sense to consider cranking out a fresh quad core APU on 12LP+ for the global market. But given the greater severity of the GPU shortage, it probably does make more sense to focus on GPUs for any excess supply not gobbled up by chipsets and older Pro chips.
That being the case, they should crank out RX 580/590 or an optimized "585" in the short term. Other than that, possibly retool Vega to use Polaris' memory controller for a more cost-effective 12LP GDDR GPU with some substantial grunt.
dersteffeneilers - Wednesday, December 29, 2021 - linkit especially doesn't make since 7nm is of course a better - if more expensive - node. The additional cost might be compensated by a thinner battery and chassis, which also make for a more attractive device. My guess is that IO dies are going to stay at 12nm (or a modification perhaps) for the foreseeable future. But in that timeframe, maybe GF is going to license another node.
meacupla - Friday, December 24, 2021 - linkI sure hope not. X570 ran way too hot for what it did.
X670 is rumored to be dual B650 chipset that is unlikely to fit on mITX boards, and if they make this stuff on 12nm/14nm, I don't think many users would be pleased with how hot that chip would get.
flashmozzg - Friday, December 24, 2021 - linkWasn't X570 on 14nm? Not like there is a big difference between 14nm and 12nm+++ but still...