AMD and GlobalFoundries update supply agreement
On May 13, 2021, Advanced Micro Devices (AMD), entered into an amended seventh amendment to the wafer supply agreement with GlobalFoundries (GF) to extend GF’s capacity commitment and wafer pricing to AMD under the backdrop of the current global supply environment.
The terms of the previous amendment to the wafer supply agreement required the parties to mutually agree on annual wafer purchase targets and wafer pricing beyond 2021. The new update modifies certain terms of the wafer supply agreement applicable to purchases at the 12 nm and 14 nm technology nodes by AMD until the end of 2024. Specifically, GF agreed to a minimum annual capacity allocation to AMD for years 2022, 2023 and 2024. At the same time, the update removes all prior exclusivity commitments and provides AMD with full flexibility to contract with any wafer foundry with respect to all products manufactured at any technology node, the company states in a SEC filling. Further, AMD and GF agreed to pricing and new annual wafer purchase targets for years 2022, 2023 and 2024, and AMD agreed to pre-pay certain amounts for those wafers in 2022 and 2023. If AMD does not meet the annual wafer purchase target for any of these years, the company will be required to pay to GF a portion of the difference between the actual wafer purchases and the wafer purchase target for that year. AMD says that it currently estimates that it will purchase approximately USD 1.6 billion of wafers from GF for years 2022 to 2024 under the new update.