AMD and GlobalFoundries wafer supply agreement renewed

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Recently, AMD issued a brief note as part of the relevant documents submitted to the United States Securities and Exchange Commission (SEC). In this note, AMD has confirmed that it will update the wafer supply agreement with its long-term partner GlobalFoundries. According to the latest agreement, the two parties will extend the term for one year on the basis of the original agreement, increasing the total amount by $500 million.
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“Industrie: Werk GLOBALFOUNDRIES Dresden, Deutschland” by MWM Energy is licensed under CC BY-NC-ND 2.0

The last update of the wafer supply agreement between AMD and GlobalFoundries was in May of this year, and it was not a long time ago. According to the terms at the time, the supply period of AMD and GlobalFoundries will extend until 2024. At the same time, AMD will purchase approximately $1.6 billion worth of wafers from GlobalFoundries between 2022 and 2024. In addition, there are no other exclusive commitments in the updated terms, which means that AMD can use all the process nodes they deem appropriate from any foundry.

After the update of the wafer supply agreement, the supply period between AMD and GlobalFoundries will continue until 2025, and AMD will increase the total wafer orders from $1.6 billion to $2.1 billion. Both AMD and GlobalFoundries did not disclose whether there are specific procurement indicators for each year, but according to the current amount of the new agreement, GlobalFoundries will supply AMD with more than $500 million of wafers per year on average.

It is worth noting that, like the previous agreement, the new agreement is also two-way binding. GlobalFoundries needs to allocate minimum production capacity to AMD, and AMD needs to pay for these wafers regardless of whether it is used or not. The continued shortage of semiconductor supply may be the reason why AMD has locked in the supply of additional capacity in advance, and it may also be that AMD is optimistic about the development in the next few years. For the time being, it is not clear where AMD will use these additional wafers. GlobalFoundries should provide 12nm/14nm capacity. Over time, the demand for chips using this process will gradually decrease.

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