AMD has finally been released from its exclusive contract with GlobalFoundries, its own manufacturing arm; AMD has been free of the pesky GloFo royalties for a while and is now free to pursue chips from other manufacturers at 7nm and below, but 12nm/14nm chips are still tied to wafer supply contracts with their former manufacturing plants. However, with the latest amendment to this agreement, these exclusivity clauses are now a thing of the past.

AMD announced this change in an 8-K filing with the SEC. In this filing, AMD outlined the Seventh Amendment to the Wafer Supply Agreement. As a reminder, this is an amendment to the Amendment.

This amendment allows AMD to pick up any process node it wants, from any manufacturer, any time it wants. This means that AMD was allowed to source "7nm and above" chips from any manufacturer, but was committed to sourcing all 12nm and above chips from GlobalFoundries, hence the I/O chips for Ryzen processors from the previous manufacturer had to be sourced from the previous manufacturer. [The A&R Seventh Amendment amends certain provisions of the Wafer Supply Agreement applicable to the Company's purchases of wafers for the 12nm and 14nm technology nodes from May 12, 2021 through December 31, 2024. The A&R Seventh Amendment also removes all previous exclusivity commitments and provides full flexibility to contract with any wafer foundry for all products manufactured at any technology node"

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This means that AMD can now effectively source 12nm I/O dies from anywhere, but will probably not change suppliers.

That is because the WSA amendment also outlines a deal whereby AMD will purchase $1.6 billion worth of 12nm and 14nm chips from GloFo through 2024. That's a lot of chips, and while AMD plans to ship Ryzen and Epyc chips (all using 12nm I/O chiplets) in large quantities, it's still a big ask."

"Additionally, the Company and GF have agreed on pricing for 2022, 2023 and 2024 and new annual wafer purchase targets, and the Company has agreed to prepay GF a certain amount of these wafers in 2022 and 2023."

"We currently estimate that we will purchase approximately $1.6 billion of wafers from GF between 2022 and 2024 under the Seventh Amendment to the A&R.

If AMD does not procure $1.6 billion in wafers from GloFo by 2024, it will have to cough up some cash to cover its inventory. Therefore, AMD may want to continue using some of GloFo's chips for the next few years.

That's not as bad as it sounds: GloFo has given up on 7nm manufacturing, so 12nm/14nm is the latest mainstream process node; AMD is using these chips for I/O in parallel with core clusters manufactured on TSMC's 7nm process node. I/O in parallel with core clusters manufactured on TSMC's 7nm process node. This is because I/O does not benefit as much from the most advanced nodes, and AMD can save a lot of cash and not lose as much by sticking with 12nm.

AMD may be trying to continue using 12nm I/O dies in future Ryzen desktop chips.

Modifying the WSA has cost a lot of money before, with AMD spending $340 million to modify its contract with GloFo in 2016. However, it is unclear if there is a fee to pay for this amendment, as the deal has been chopped and changed several times recently to provide more flexibility without penalty.

And what I think AMD should do with these 12nm wafers. The idea is to revive Polaris on a shoestring budget. But perhaps I am just longing for the days of amazingly inexpensive and amazing graphics cards...