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AMD strikes $1.2B wafer supply deal with Globalfoundries

  • Under the terms of an amended supply agreement with foundry partner Globalfoundries, AMD expects to buy $1.2B worth of wafers in 2014. The chipmaker says the deal doesn't impact its 2014 financial/gross margin targets.
  • Back in Dec. 2012, AMD agreed to make a $320M termination payment to Globalfoundries to downsize a supply agreement on account of weaker-than-expected sales.
  • AMD disclosed on its Q4 CC (transcript) it bought only $960M worth of wafers from Globalfoundries in 2013, less than the $1.15B it expected to purchase via the amended deal. But the company added there were "no penalties associated with this reduction," and that it's aiming to "manage inventory flat to down year over year."
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Comments (32)
  • JYX
    , contributor
    Comments (26) | Send Message
     
    6.00 tomorrow!
    1 Apr, 05:08 PM Reply Like
  • Neosephiroth86
    , contributor
    Comments (273) | Send Message
     
    I am not an analyst but it seems pretty good news, because the company expects more sales this year. Let's see if that was already priced in or not.
    1 Apr, 05:11 PM Reply Like
  • Kala_Pathar
    , contributor
    Comments (48) | Send Message
     
    They must have gotten a better pricing if they agreed to a higher payment number. Better Gross Margins and better bottom line overall.
    1 Apr, 05:24 PM Reply Like
  • JYX
    , contributor
    Comments (26) | Send Message
     
    1.2/0.96*5.3=6.6bil !
    1 Apr, 05:11 PM Reply Like
  • Neosephiroth86
    , contributor
    Comments (273) | Send Message
     
    More than twice its mkt cap
    1 Apr, 05:11 PM Reply Like
  • JYX
    , contributor
    Comments (26) | Send Message
     
    boom boom pow tomorrow!
    1 Apr, 05:14 PM Reply Like
  • kjurden
    , contributor
    Comments (734) | Send Message
     
    It's only going to get better!
    1 Apr, 05:13 PM Reply Like
  • GameKing13
    , contributor
    Comments (351) | Send Message
     
    Daaaaaaaaaaaaaammmnnnn, was gonna add shares today but decided to wait til tomorrow
    1 Apr, 05:31 PM Reply Like
  • pg4u
    , contributor
    Comments (14) | Send Message
     
    I am long $AMD. But I don't see this as good news. Last year they were making only CPU/APU (excluding game console APU) in global foundry and they bought about 1B chip. this year they are getting game console apu also from global foundry. So AMD should have been targeting somewhere 1.5-2 B worth of chips...
    1 Apr, 05:55 PM Reply Like
  • Kala_Pathar
    , contributor
    Comments (48) | Send Message
     
    Game consoles so far have been supplied by TSMC.
    1 Apr, 05:57 PM Reply Like
  • kjurden
    , contributor
    Comments (734) | Send Message
     
    @pg4u..Don't forget about TSMC..They're still making chips for AMD as well.
    1 Apr, 06:56 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8900) | Send Message
     
    After all, Mubadala sits on both sides of the table, by way of ATIC. I interpret Rory Reads' words as good demand.
    1 Apr, 06:03 PM Reply Like
  • GameKing13
    , contributor
    Comments (351) | Send Message
     
    Andreas, you back on the AMD bandwagon ?
    1 Apr, 07:38 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8900) | Send Message
     
    No. I am just 1000 cheeseburgers in the green, also thanks to the $/€ FX. If AMD goes a bit higher into earnings, I better sell. Getting AMD'ed for a fourth time would mean more than an entire year dead money in my case and I can't afford that. I own too many AMD shares to carelessly park them for a day that never comes.
    1 Apr, 07:44 PM Reply Like
  • geekinasuit
    , contributor
    Comments (1189) | Send Message
     
    @Andreas, You do realize of course, that the day after you've sold all your shares will be the day the price doubles.
    1 Apr, 08:39 PM Reply Like
  • Neosephiroth86
    , contributor
    Comments (273) | Send Message
     
    Don't you have kronas in sweden?
    2 Apr, 12:55 AM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8900) | Send Message
     
    My book is in € (Dutch bank). This is what will happen, knowing my luck with this stock: I sell and AMD rises or I keep and AMD tanks.
    2 Apr, 01:29 AM Reply Like
  • Neosephiroth86
    , contributor
    Comments (273) | Send Message
     
    How many shares do u have?
    2 Apr, 02:14 AM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8900) | Send Message
     
    A higher five digit figure, too many.
    2 Apr, 02:17 AM Reply Like
  • Neosephiroth86
    , contributor
    Comments (273) | Send Message
     
    Me 30,6k, but I might double.
    2 Apr, 03:08 AM Reply Like
  • GAlan
    , contributor
    Comments (271) | Send Message
     
    From Barron's: AMD bought no gaming chips last year from Global, nor graphics processing units, or GPUs. Hence, both parts are new this year for the two companies’ arrangement, according to an AMD spokesperson.

     

    So it may be possible that the supply delays will be shortened and higher sales going forward.
    1 Apr, 07:51 PM Reply Like
  • geekinasuit
    , contributor
    Comments (1189) | Send Message
     
    I wonder if they are just shifting business away from TSMC into GF or expanding the business into GF, not clear at all which way this is going.
    1 Apr, 08:12 PM Reply Like
  • Van Hyder
    , contributor
    Comments (168) | Send Message
     
    When people start quoting Barron's to justify their long (I'm long too) it worries me!
    1 Apr, 08:12 PM Reply Like
  • GAlan
    , contributor
    Comments (271) | Send Message
     
    Only quoting to point out that they asked AMD people who clarified that the production at GF of game and gpu chips will be new , and it is not justifying my amd holdings I purchased 6 mos ago , but will not hold thru the er like AH
    1 Apr, 08:38 PM Reply Like
  • Keeperofthq
    , contributor
    Comments (6) | Send Message
     
    Now that AMD no longer has hundreds of millions in penalties hanging over their head, we can see some analysts upgrades. The increase in chip order will translate into over $1 billion in added revenue if not closer to 2.

     

    Before this new agreement was announced, analysts must have been reluctant to give any upgrade with this being a huge unknown.

     

    With it out of the way, bring on the upgrades.
    1 Apr, 09:47 PM Reply Like
  • AMD=CHAMP
    , contributor
    Comments (14) | Send Message
     
    Nooooooo!! Now look, AMD is going to go up. Dang it! Maybe, just maybe, they might hold it down the first 10 minutes tomorrow so I could buy more?
    2 Apr, 02:02 AM Reply Like
  • SeanLEE
    , contributor
    Comments (95) | Send Message
     
    1.2B sounds kinda smaller than I was expecting...after all its including PC market products, GPUs and consoles. Not a good sign and the ER is coming soon.
    2 Apr, 02:27 AM Reply Like
  • Fanebrb
    , contributor
    Comments (570) | Send Message
     
    My calcs show a 6.9 PT within 6 mos., while ignoring the MOS which has little impact.
    2 Apr, 02:38 AM Reply Like
  • fishtrout
    , contributor
    Comments (2) | Send Message
     
    I read it as good demand as well. Bodes well going forward
    2 Apr, 02:39 AM Reply Like
  • GAlan
    , contributor
    Comments (271) | Send Message
     
    Trading as usual, this announcement did not move the sp
    2 Apr, 02:58 PM Reply Like
  • binartech
    , contributor
    Comments (232) | Send Message
     
    A) Does any one knows how many chips, average, can be $1.2B
    2 Apr, 09:53 PM Reply Like
  • binartech
    , contributor
    Comments (232) | Send Message
     
    I think AMD will report more than 1.7B in sales in Q1 and SP going to 6.
    if they agree to pay 1.2B to GF it means they already make the numbers. Don't think they will make again a mistake and miss budget. Who knows how much they buy from TSMC which must be not less or more than what they buy from GF.I think that they are ordering more to GF because of more demand. Can be moving production from TSMC to GF, could be, but demand for the semicustom products like PS4, XB1 and McPro and coin mining is going up so it more likely to think about increase in production, not moving production from TSMC to GF.

     

    They are not so dependent on PC market behavior.

     

    They know that in 2014 there are at least PS4, XB1, McPro. coin mining, low end gaming PCs relaying on mantle. And will see what Server business will bring ?may be GF will supply server chips and thats the plus from 950M to 1.2B and just for starting, who knows !!!

     

    LONG AMD
    2 Apr, 11:39 PM Reply Like
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