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
Start Date 2022 2022 2019
End Date 2025 2024 2024
GlobalFoundries Exclusivity? No No Partial
(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

POST A COMMENT

71 Comments

View All Comments

  • mode_13h - Sunday, January 2, 2022 - link

    I'm convinced English is a rubbish language for contracts. Reply
  • TristanSDX - Friday, December 24, 2021 - link

    such old and cheap process is great for stuff that do not need high density and do not scale well on newest processes, so it may be mem and PCIE PHY, display controller, RAMDAC, USB, Thunderbold, etc. This is result of increasing use multiple different asics than single monolithic asic. Reply
  • bananaforscale - Thursday, December 30, 2021 - link

    GPUs don't use RAMDACs anymore when they only have digital outputs. The term is a misnomer these days, pixel clock would be more accurate and anyway, even for things that *do* have analog video outputs they are integrated and have been for decades.

    It absolutely WILL NOT be used for memory. It's easier and cheaper to just buy it rather than have your own production chain which would make little sense.

    BTW, if anything, things are getting more integrated into single chips. Less packaging, less space required, easier board design, cheaper... And the chips aren't really monolithic in the way you seem to think. At the very least there are several versions of basically everything.
    Reply
  • mode_13h - Sunday, January 2, 2022 - link

    PCIe's PAM4 encoding needs something like a DAC/ADC. Not sure how many other interconnects use something like a modulation scheme.

    Anyway, I think the point was that older process nodes can be used for *chiplets* containing some of these interface blocks.
    Reply
  • Oxford Guy - Friday, December 24, 2021 - link

    Is the 32nm SOI still being made by GF? Reply
  • Oxford Guy - Monday, December 27, 2021 - link

    Did GF ever put the 22nm SOI from IBM into production? Reply
  • KennethAlmquist - Wednesday, December 29, 2021 - link

    The currently have a 22nm SOI processes (marketed as 22FDX). I assume, but don't know for sure, that that's essentially the IBM process. They've added support for MRAM (a nonvolatile memory technology) and RF (radio frequency, allowing the process to be used for things like automotive radar). Reply
  • Oxford Guy - Friday, December 31, 2021 - link

    Thanks for that info. What happened to the 32nm SOI machines? Reply
  • Oxford Guy - Friday, December 31, 2021 - link

    I did a quick Google search and the 22nm process is from IBM. The latest interesting article I found about it was posted here in 2018. Apparently it’s targeted at chips 150 sq mm and smaller, due to wire capacitance making the process non-competitive against finFET with anything larger.

    Curious about the 32nm equipment since everything old is new again due to the chip crunch.
    Reply
  • Tams80 - Saturday, December 25, 2021 - link

    They have long term hardware to support, so it'll be that.

    Given that embedded solutions (at lot of that use these nodes) get five years of support, plus an option for two more, means that embedded solutions bought as far back as 2018 (one year after Ryzen released) will need to be supported with option for new (not new new) hardware. Bear in mind that these solutions also probably don't need more advanced nodes.

    And hey, AMD might use some of the capacity to release some low end consumer CPUs/APUs.
    Reply

Log in

Don't have an account? Sign up now