AMD Cancels Exclusivity Commitment To GlobalFoundries 12nm and 14nm Wafers

Chip designer Advanced Micro Devices, Inc (AMD) has revised its agreement with GlobalFoundries, Inc equally the global semiconductor shortage stresses capacities all around. AMD sources chips manufactured on the relatively mature 12nm and 14nm process nodes from Global Foundries, with the residual of the visitor's products manufactured past the Taiwan Semiconductor Manufacturing Company (TSMC).

With the majority of global contract fleck manufacturing concentrated in Asia, GlobalFoundries is one of two chipmakers currently operating in the Us. Withal, information technology does not industry semiconductors on the leading-border 7nm and 5nm process nodes. As a result, TSMC and Samsung have absolute control over the sector globally and U.S. fleck giant Intel Corporation racing to catch upwards.

AMD To Purchase $1.6 Billion Worth Of Wafers From U.S. Supplier

The two salient points of the agreement modification revise the seventh amendment to AMD'due south Wafer Supply Agreement with GlobalFoundries. Before the revision, the amendment did non require the chipmaker to allocate a minimum capacity for AMD's needs, and AMD had provided 'exclusivity commitments to GlobalFoundries, through which information technology was jump to buy its products only from the New York-based fab.

According to the Amended and Restated Seventh Subpoena to the Wafer Supply Agreement shared by AMD with the Securities and Exchange Commission, GlobalFoundries volition no longer be its sectional supplier for the 12nm and 14nm nodes. Additionally, in light of recent supply constraints in the chip sector, the fab will as well allocate minimum capacities for AMD's needs from 2022 to 2024.

Specifically, as the amendment reads,

Specifically, GF agreed to a minimum annual capacity allotment to the Company for years 2022, 2023 and 2024. The A&R Seventh Subpoena also removes all prior exclusivity commitments and provides the Company with full flexibility to contract with whatever wafer foundry with respect to all products manufactured at any engineering science node.

A GlobalFoundries chipmaking plant in Dresden, Frg. Image: Global Foundries

The pair have too agreed on new buy targets and pricing details, through which AMD will pre-pay GlobalFoundries for some of the products that information technology will purchase over the class of the next few years. The pre-payment volition cover the products that AMD has agreed to buy from GlobalFoundries between 2022 and 2024, only as should be evident, AMD will not pay all of the cost beforehand.

Additionally, the Santa Clara-based fleck designer has agreed to recoup GlobalFoundries for whatever shortfalls from the buy agreements. The revised amendment volition crave AMD to pay the chipmaker a portion of the deviation between the purchase target and the prepayment if information technology fails to meet the purchase commitment.

The precise percent of the shortfall that AMD will embrace is not stated, but the company has highlighted that it will purchase roughly $ane.half-dozen billion of wafers from GlobalFoundries from 2022 to 2024.

The relevant portion of the amendment covering these details outlines:

Further, the Company and GF agreed to pricing and new annual wafer buy targets for years 2022, 2023 and 2024, and the Visitor agreed to pre-pay GF sure amounts for those wafers in 2022 and 2023. If the Company does not meet the annual wafer purchase target for any of these years, the Company volition be required to pay to GF a portion of the difference between the actual wafer purchases and the wafer purchase target for that year. The Visitor currently estimates that information technology volition purchase approximately $1.6 billion of wafers from GF for years 2022 to 2024 nether the A&R 7th Subpoena.

By revising its agreement, AMD has ensured that it maintains supplier diversity for the 12nm and 14nm nodes and has some capacity booked simultaneously. In addition, the company uses these process nodes for some of its trailing-edge products, and Input-Output dies for the leading-border consumer-focused Ryzen and enterprise-focused EPYC products.