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. The seventh such wafer amendment between the two parties, it marks the latest shift in how the two companies do business with each other amidst changing business strategies on both sides. However it also won't be the last; while the latest amendment sets purchase targets through 2021, the overall WSA itself will still run through March 1, 2024.

The big news with the latest WSA update is that it allows AMD to contract any foundry to produce chips at 7 nm and thinner nodes without any one-time payments or royalties to GlobalFoundries. GlonbalFoundries, of course, announced last year that they were getting out of the race for cutting-edge manufacturing nodes, including 7nm, potentially putting AMD in a long-term bind as their high-end products require competitive manufacturing processes. As a result there has been a big question in how AMD and GlobalFoundries would resolve this dispute, and the latest WSA revision finally supplies the answer.

The net result is that as of this moment, AMD has slated all of their currently-announced leading-edge 7nm CPUs and GPUs to use TSMC's 7nm process, and AMD is further free to tap Samsung as well if they desire. Past that, the latest WSA update will see AMD continue to rely heavily on GlobalFoundries for any larger nodes, as the firm will remain AMD’s long-term strategic supplier for 12nm and above. 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 use/sell 12LP and 14LPP chips in high volumes in a bid not to pay charges to its partner. That said, since AMD does not disclose what the required wafer volumes are, 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. And over the next several years, the company will have to supply numerous customers with these products for embedded and commercial applications (e.g, Ryzen Pro, Ryzen embedded, and EPYC processors), not to mention the 14nm-based I/O die to be used in AMD's next-gen server and desktop processors. So even though AMD's cutting-edge parts are starting to transition to 7nm, AMD will still have plenty of demand for 12nm+ manufacturing, and will continue to need GlobalFoundries going forward.

Meanwhile, it's worth noting that while the latest WSA amendment lays out detailed volume and pricing plans through 2021, AMD's overall agreement with GlobalFoundries still runs through 2024. So in the next couple of years, AMD and GlobalFoundries will still need to decide how the fab will supply AMD over the final years of the agreement. Which will make for an intriguing situation to say the least given GlobalFoundries' recent change in direction. At a high level it's easy enough to see how AMD could utilize 12nm+ capacity through 2021, but AMD's needs for such a large node (or GlobalFoundries' other specialized nodes) in the 2022-2024 timeframe are not nearly as obvious.

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.”

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Source: AMD

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  • DeepLearner - Monday, February 4, 2019 - link

    I cannot understand how anyone could be so upset by this. I didn't even notice. What is the matter with you?
  • Freeb!rd - Tuesday, January 29, 2019 - link

    Shouldn't be... including the no penalty for going to others for 7nm. GF was in material breach of the previous wafer agreement, since AMD & GF were working on implementing 7nm together. When GF canceled 7nm that pretty much kiboshed the wafer agreement.
  • iwod - Tuesday, January 29, 2019 - link

    Does the agreement includes the usage of their FD-SOI?

    I have been wondering if the I/O Die will switch to GF's FDX after 12nm.
  • Freeb!rd - Tuesday, January 29, 2019 - link

    Yeah, I've been wondering if they could leverage FD-SOI for some low power APUs or something... once upon a time in a Fab far far way (in Germany) AMD fabbed all their processors on SOI. :) and maybe even mix in some eMRAM; haven't heard the status on that for FDX-12 yet.
  • yeeeeman - Wednesday, January 30, 2019 - link

    GF statement should be:
    “AMD remains an important (cow to milk money from) as we reshape our portfolio to intensify investment in the technologies that provide the most value to customers, (since we don't have the money to invest in newer nodes) . We are proud to be a critical (suction point) of AMD’s current-generation 14nm and 12nm products, and we look forward to continuing to play a key role in (lowering) their next-generation products revenues.
  • deksman2 - Wednesday, January 30, 2019 - link

    Pretty much sums up the whole thing accurately.
    First AMD was forced to stay with GF or incur large fines, and now that they finally broken free of that constraint, it comes with a levy that AMD is obligated to continue using GF for something.
    This is the only reason AMD is using GF for the Zen2 and beyond interconnect (I/O) and now upcoming Ryzen+ mobility APUs (12nm).

    In 2020, AMD is likely to only have I/O orders from GF (either on 14nm or 12nm).
  • edzieba - Wednesday, January 30, 2019 - link

    That's going to make things interesting for laptops (and semi-custom) for Zen 2: with Uncore now locked to 12nm for the next few years, that's going to leave them at a power budget deficit compared to Intel, who are aggressively moving even their chipsets over to leading edge processes to keep power down. With Raven Ridge and Picasso AMD went for monolithic dies for CPU & GPU (rather than discrete dies for each), if they keep that up for Zen 2 moving to 7nm that's going to leave them short in the wafer agreement on their highest volume parts.
  • Daeros - Wednesday, January 30, 2019 - link

    Is this the same Intel that has had to move production of chipsets to older (22nnm) fabs to keep up with demand?
  • deksman2 - Wednesday, January 30, 2019 - link

    No. Intel effectively can't maintain production volume using 14nm, so they had to resort to 22nm to fill up some of the blanks and keep up with the demand (which seems like a step backwards).

    AMD made a deal with GlobalFoundries that they need to keep ordering something from them in order to make a 'clean break'.
    This is just GF playing dirty and milking AMD for more revenue... but at least the royalty fees have been removed.
    So, AMD will only be using GlobalFoundries this year to produce 12nm Ryzen+ mobile stuff (APU's) along with the Interconnect for Zen 2.
    And next year (2020), they will probably only have the Interconnect on the back-order from GF for Zen 3.

    That's kinda part of the deal for AMD to get away from GF. It shouldn't hamper them in the long run (hopefully).
  • deksman2 - Wednesday, January 30, 2019 - link

    For Zen 2, AMD is only using the GF to get the Interconnect... everything else is done at TSMC.
    This deal will basically result in Ryzen+ (12nm) APU's coming it this year (3xxx series) along with the Interconnect.
    And next year (2020), AMD will probably only have I/O connect done at GF (on either 14 or 12nm) for Zen 3.

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