In a brief Securities and Exchange Commission Form 8-K filing, AMD this afternoon has revealed that it has once again amended its wafer supply agreement with US fab (and AMD fab spin-off) GlobalFoundries. Under the terms of the amended seventh amendment, AMD will see out its existing commitment to use GlobalFoundries through 2024, with the latest amendment setting purchase targets for 2022, 2023, and 2024. Beyond those new targets, however, the agreement releases AMD from all further exclusivity commitments to GlobalFoundries. AMD is now free to use any fab on any process node that it wants.

As a quick refresher, the seventh WSA amendment, which was signed in January of 2019, set terms for the AMD/GlobalFoundries relationship through the end of 2024. Among other things, it set wafer purchase targets for the first three years of the agreement (2019-2021), leaving the last three years to be negotiated at a later time. Meanwhile, that agreement also began the process of decoupling AMD from GlobalFoundries by allowing AMD to utilize other competing fabs for 7nm and smaller, while GlobalFoundries remained AMD’s exclusive provider for chips made on 12nm and larger nodes.

The latest amendment, in turn, essentially finishes what the seventh amendment started. In what AMD/GloFo are calling the “A&R Seventh Amendment”, the updated amendment sets wafer purchase targets for 2022, 2023, and 2024. The full details on these targets are not yet available, however according to the 8-K filing, AMD expects to buy approximately $1.6 billion in wafers from GlobalFoundries in the 2022 to 2024 period.

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. For finished wafers, the agreement sets new, undisclosed prices. Meanwhile for any capacity AMD does not use, they will once again be required to pay GlobalFoundries a portion of the difference. GlobalFoundries will be also getting pre-paid for some of these orders in 2022 and 2023, though the 8-K form does not disclose by how much.

Arguably the bigger news here is that, outside of AMD’s minimum wafer purchase requirements over the next three years, the latest amendment otherwise further separates AMD and GlobalFoundries going forward, as it removes all other exclusivity commitments. This leaves AMD free to place orders at any fab on any process node that the company wishes, as opposed to having to use GlobalFoundries for 12nm and beyond.

Now with that said, the net impact of this change is likely to be limited as AMD was already free to pursue other fabs for 7nm and smaller nodes – which will be the vast majority of AMD’s needs over the next three years. But it does underscore how AMD and GlobalFoundries are slowly moving farther apart, as GlobalFoundries has left the race for cutting-edge manufacturing nodes.

It should also be noted that the latest WSA does technically extend the agreement one last(?) time. The previous seventh amendment was set to expire March 31st, 2024. Whereas the new amendment expires on December 31st, 2024. However other than adjusting it to cover the full calendar year, there are no current signs that AMD plans to significantly extend their current agreement with GlobalFoundries. By dropping all exclusivity agreements – and especially in the midst of this chip crunch – it looks like AMD is slowly winding down its dealings with GlobalFoundries for high-performance logic chips.

In the meantime, however, AMD still has three years and $1.6 billion in wafer orders to place at GlobalFoundries. According to a separate statement from AMD, these 12/14nm wafer orders will be used to fulfill orders for trailing-edge logic products, as well as for I/O dies for AMD’s current-generation Ryzen and EPYC CPUs. As with their trailing-edge prodcts, the company will still need to keep producing their current-gen products for a time, even after they’re supplanted with newer technologies. And, given the ongoing chip crunch, having a contractually-guaranteed supply of chips is no doubt a great relief to some executives within AMD.

Still, it’s somewhat difficult to imagine AMD needing over a billion dollars in last-gen logic and I/O dies going into the next three years. In 2019 we remarked that “AMD's needs for such a large node (or GlobalFoundries' other specialized nodes) in the 2022-2024 timeframe are not nearly as obvious” and that remains true to this day. So it will be interesting to see if AMD places enough orders to use all of that capacity, or whether they'll end up leaving some of it on the table.

Finally, GlobalFoundries also sent out a brief statement sharing their thoughts on the newest WSA amendment.

“We have partnered with AMD for more than a decade, playing a key role in accelerating their business, and look forward to extending our partnership for years to come. GF will provide wafers from our Fab 8 Malta, NY, facility, reinforcing both companies’ commitment to manufacturing in the United States.

This agreement gives AMD the support they need to continue their explosive growth in the server and high performance computing markets, and it demonstrates GF’s commitment to redefining the fabless-foundry relationship and helping out customers win their respective market segments”

 

Source: AMD IR

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  • Blastdoor - Thursday, May 13, 2021 - link

    This deal is getting worse all the time

    https://www.youtube.com/watch?v=3D8TEJtQRhw
    Reply
  • sgeocla - Friday, May 14, 2021 - link

    $1.6B over the next years is small change for AMD and they still need a lot of 14/12nm wafers for Rome, Milan & Ryzen 4000/5000 series IO dies, MB chipsets, etc. Newer generations have all just launched in the last 6 months and will still be in the market for that time frame (2023-2024).

    I guess you also don't realize that this new deal means that AMD won't have to pay penalties for Xillinx products that are on TSMC's older nodes. Under the old WSA AMD could not freely use TSMC modes older than 7nm.

    This is a much needed improvement on the old WSA and only people that are not focusing on the whole picture see it differently.
    Reply
  • node55 - Friday, May 14, 2021 - link

    You might want to rethink the IO die strategy.

    It already consumes 46% of the power of Milan and is the reason Milan is power constraint and is underwhelming.

    https://www.anandtech.com/show/16529/amd-epyc-mila...

    This supply agreement is dragging down by each iteration.

    Die size is not AMDs Problem, it is power consumption and perf/watt. In both metrics they are trailing the leader (apple) and to be stuck in 2024 with 12nm, when you have to supply PCI6 (super high clocks -> massive power hog), DDR5 and the leader is 4 nodes more advanced (TSMC 2nm) is brutal.
    Reply
  • psychobriggsy - Friday, May 14, 2021 - link

    I think it's a given that part of the reason for this move is to allow AMD to make 7nm IODs for the next generation of products.

    But for the current products, they still need to make the dies, and these products will be available for a while yet, even after the next generation comes out in 2022.

    And then there's low-end Chromebook fodder - Zen+ APUs and the like, that could be used for a long time yet.
    Reply
  • dotjaz - Saturday, May 15, 2021 - link

    And how dumb of you to assume 4 nodes of difference is big enough for IO? Remember 4 nodes ≠ 4 generations. For IO, 12LP+ will still be a full generation of advancement on 12LP. And AMD won't even ship 2nm by until Q42024. Reply
  • sgeocla - Monday, May 17, 2021 - link

    I wasn't talking about future EPYC designs. Milan and even Rome are still ramping all we be at least for the next 2 years considering they are the last designs using DDR4 memory so the GF wafers in the WSA are put to good use going in the highest margin products.
    Milan is better than anything Intel has with DDR4 and next gen DDR5 Genoa will use 7nm IO dies when going against DDR5 Sapphire Rapids. Milan is better in performance and most importantly in yields and availability. Intel has 10nm high core count Ice Lakes but those are golden sample dies with the lowest possible yields.

    Comparing server CPUs with Apple SoCs is comparing apples and oranges. You should compare Ryzen 5800U on TSMC 7nm with the M1 at 25W (which is what the M1 uses at full load) and see that AMD is highly competitive even being 1 node behind and using outdated Vega graphics instead of RDNA2. If the 5800U was using RDNA2 and TSMC 5nm like the A1 it would outperform it in every way. Apple has a node advantage and they are only able to use it because of their walled garden OS which means they are limited in market share growth. Just like on mobile.

    Talking about AMD being stuck with 12nm in 2024 compared to Apple using TSMC 2nm (on top of comparing server CPUs with mobile SoCs) shows just how ignorant you are by not knowing that AMD has been shipping 7nm SoCs for the last 2 yeas and its roadmaps already show 6nm this year and 5nm SoCs next year.
    Reply
  • Kamen Rider Blade - Friday, May 14, 2021 - link

    AMD's X570 Chipset was built on GloFlo 14nm.

    AMD's 300/400 series Chipset was built on GloFlo 55nm.

    So I can forsee room for more 14nm Chipsets in the future for the full X#70 / B#50 / A#20 Chipsets all on 14nm.

    GloFlo still has 12nm LP & LP+ Process Nodes.

    So that should satisfy all their AM4 / AM5 ChipSet needs moving forward for the next few years.
    Reply
  • Flynny123 - Friday, May 14, 2021 - link

    Right now they could probably order a bunch more RX 580s and 590s and be pretty confident of selling them - though perhaps not a good use of their available graphics memory Reply
  • ManuelDiego - Friday, May 14, 2021 - link

    "...US fab GlobalFoundries...". The United States of Abu Dhabi? Reply
  • dotjaz - Saturday, May 15, 2021 - link

    Are you dumb? GloFo's advanced nodes are all coming from their New York fab. Reply

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