Chip company AMD will purchase silicon wafers worth US$2.1B from GlobalFoundries
According to documents filed by the US Securities and Exchange Commission, the semiconductor company Advanced Micro Devices (AMD) will purchase approximately US$2.1 billion worth of silicon wafers from GlobalFoundries owned by Mubadala between 2022 and 2025.
Wafer supply transaction
The revised transaction adds USD 500 million worth of silicon wafers to the USD 1.6 billion agreement signed on May 13, 2021, and extends GlobalFoundries' wafer supply to AMD by one year until 2025. GlobalFoundries will also increase AMD's minimum annual wafer production capacity, as per the document, from 2022 to 2025. According to GlobalFoundries, semiconductor chips used in electronic devices are built on silicon wafers, which are flat discs. The company has provided semiconductor chips to AMD for more than 12 years. The company said that with the growth of global semiconductor demand, the revised transaction is one of GlobalFoundries' new strategic long-term agreements this year.
According to a statement from GlobalFoundries, earlier this month, GlobalFoundries signed an agreement with car manufacturer BMW and microchip developer INOVA to supply BMW with "millions of semiconductors" each year. In November 2021, the company announced that it had signed a "non-binding" agreement with Ford Motor Company to provide semiconductor chips for Ford's current automotive product line.
Important quote
"For more than a year, we have been working closely with our customers to help solve the ongoing supply and demand imbalances in our industry. Our revised agreement with AMD is a typical example of our customers' desire and willingness to ensure long-term supply," GlobalFoundries Chief Executive Officer Tom Caulfield said at a press conference on Thursday.
Key background
As global demand for semiconductor chips exceeds supply, the semiconductor industry is facing a crisis this year. GlobalFoundries said its annual semiconductor investment will double in 2021, reaching 1.4 billion U.S. dollars to increase its manufacturing capabilities. Since its establishment in 2009, the company has invested 15 billion U.S. dollars in the development of semiconductors in the United States. In October of this year, the company was owned by Mubadala, Abu Dhabi's sovereign wealth fund, and raised US$2.6 billion through an initial public offering during the crisis.
California-based AMD recorded US$4.3 billion in revenue in the third quarter of 2021, more than double the revenue of US$2.8 billion in the same period in 2020. The company said it expects its fourth-quarter revenue to follow well, citing the growth of its business.
Big numbers
176.5 billion US dollars. This is the market value of AMD, which is listed on the Nasdaq as of December 22, 2021.
