AMD has finally triggered any exclusivity agreement with GlobalFoundries, its original manufacturing arm. While AMD has been free of annoying GloFo copyrights for a while and free to search for third-party chips at 7nm and below, it is still bound by a wafer supply agreement with its ex fabulous for 12 / 14nm chips. However, with the latest amendment to this agreement, these exclusivity clauses are already exceptional news.
AMD announced the change within a file 8-K presentation to the SEC, which is required when a company wants to announce something significant to shareholders. In its presentation, AMD describes a seventh amendment amended and reworded to its wafer supply agreement. This is an amendment to his amendment, in case you were wondering.
This modification gives AMD the freedom to pick up any process node, from any manufacturer, whenever it wishes. This is a slight change in what happened before, which had allowed AMD to get "7 nm and beyond" chips from whoever it was, but it also meant that it was committed to all GlobalFoundries 12 nm and larger chips, therefore, the I / O chips of its Ryzen processors had to come from its former manufacturer.
"The Seventh A&R Amendment amends certain terms of the Host Supply Agreement applicable to waiver purchases of 12 nm and 14 nm technology nodes by the company during the period beginning on May 12, 2021 and continues until December 31, 2024, ”the WSA says.
"… The Seventh A&R Amendment also removes all prior exclusivity commitments and provides the Company with full flexibility to contract with any wafer foundry for all products manufactured at any technology node."
So AMD can now get its 12nm I / O from anywhere, though it probably won’t try to switch vendors.
This is because this WSA amendment also describes an agreement for AMD to acquire 12nm and 14nm chips worth $ 1.6B from GloFo by 2024. a lot chips, and while AMD plans to ship many Ryzen and Epyc chips (all of which use 12nm I / O chips), that’s still a big question.
"In addition, the company and GF agreed on the prices and new annual targets for the purchase of wafers for the years 2022, 2023 and 2024, and the company agreed to pay certain amounts to GF in advance for these wafers in 2022 and 2023 … The company currently estimates that it will purchase approximately $ 1.6 billion in wafers from GF during the years 2022 to 2024 under the Seventh A&R Amendment. "
If AMD doesn’t like $ 1.6 trillion in GloFo wafers in 2024, it will have to cough up some of the cash to cover the inventory, anyway. Therefore, it is possible that AMD will want to continue using some of the GloFo chips for years to come.
This is not as bad as it sounds. GloFo gave up 7 nm manufacturing, which leaves 12 nm / 14 nm as its most modern main process node. AMD uses these I / O chips along with basic clusters manufactured using TSMC’s 7 nm process node. This works because I / O doesn't really benefit the cutting edge nodes as much, and AMD is able to save a lot of money and not lose as much by staying at 12 nm.
AMD may be looking to continue using 12 nm I / O arrays with future Ryzen desktop chips.
The amendments to the WSA previously cost a lot of money: AMD spent $ 340 million in 2016 to modify its agreement with GloFo. It is unclear if there is any fee to pay for this amendment, however, as the agreement has been reduced and changed very recently to offer more flexibility without penalty.
And what do I think AMD should do with all these 12nm waffles? Get Polaris on a tight budget, that’s what it does. But maybe I just miss the days of surprisingly cheap and fantastic graphics cards …