AMD on Tuesday said it had amended its wafer supply agreement with GlobalFoundries. Under the terms of the new deal the two companies agreed about prices and volumes of wafers that AMD will purchase from the U.S.-based foundry through at least 2021. Meanwhile, since the original WSA is continuing through March 1, 2024, the companies will have to continue talks.
The new WSA enables AMD to contract any foundry to produce chips at 7 nm and thinner nodes without any without any one-time payments or royalties to GlobalFoundries, as per agreement signed several years ago. While all leading-edge CPUs and GPUs from AMD at 7 nm node and beyond will be made by TSMC as GlobalFoundries decided to abandon its 7 nm fabrication process in a bid to focus on specialized manufacturing technology, it will remain AMD’s long-term strategic supplier of wafers processed using its 12 nm and thicker processes (i.e., 14 nm and others). The new agreement sets purchase commitments by AMD and prices by GlobalFoundries through 2021.
One of the important aspects of the new agreement is that if AMD fails to meet the annual wafer purchase target for 2019, 2020, and 2021, it will have to pay GlobalFoundries “a portion of the difference” between the actual wafer purchases and the planned target for that year. While this is not exactly a take-or-pay agreement that AMD used to have with GlobalFoundries several years ago, it will still have to sell 12LP and 14LPP in volumes in a bid not to pay charges to its partner. Since AMD does not disclose volumes of such products, it is unclear how they will affect the company’s product mix in the coming years.
At present AMD sells numerous products fabricated by GlobalFoundries using its 12LP and 14LPP manufacturing technologies. Furthermore, the company will have to support numerous customers with the said products for embedded and commercial applications (e.g, Ryzen Pro, Ryzen embedded, and EPYC processors). Therefore, AMD will clearly need GlobalFoundries going forward. Moreover, AMD’s next-gen server and desktop processors will use I/O dies made using GF’s 14LPP technology.
The statement by AMD reads as follows:
“Today AMD announced it entered into a seventh amendment to its wafer supply agreement with GLOBALFOUNDRIES Inc. (GF). GF continues to be a long-term strategic partner to AMD for the 12nm node and above and the amendment establishes purchase commitments and pricing at 12nm and above for the years 2019 through 2021. The amendment provides AMD full flexibility for wafer purchases from any foundry at the 7nm node and beyond without any one-time payments or royalties.”
GlobalFoundries said the following:
“AMD remains an important strategic partner as we reshape our portfolio to intensify investment in the technologies that provide the most value to customers. We are proud to be a critical supplier of AMD’s current-generation 14nm and 12nm products, and we look forward to continuing to play a key role in their next-generation products.”
This is a breaking news, we are adding more details as we get them.