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What you need to know for 10/19/2017

GloFo gets order for $1.2B in chips

GloFo gets order for $1.2B in chips

Advanced Micro Devices will be increasing its computer-chip purchases from GlobalFoundries this year

Advanced Micro Devices will be increasing its computer-chip purchases from GlobalFoundries this year, the company said.

AMD, which was once GlobalFoundries’ parent company, will buy $1.2 billion worth of chips from GlobalFoundries during 2014, according to a company announcement. That would be up from $960 million last year, but about the same as was purchased in 2012.

Under the terms of an amended wafer-supply agreement, GlobalFoundries will make chips for AMD’s personal computer microprocessor needs, and also its graphics processor unit and semicustom game console products. AMD supplies the console chips for Microsoft’s XBox and Sony’s Playstation gaming systems, and the contract involves a portion of those chips.

“These are additional products GF will produce for us in 2014 that were not a part of our 2013 purchases,” AMD spokesman Drew Prairie said in an email.

GlobalFoundries won’t say where the work will be done, but it’s likely to be at either Fab 8 in Malta or a former AMD plant in Dresden, Germany. Those are GlobalFoundries’ two most advanced manufacturing plants.

It was AMD that originally proposed what is now the GlobalFoundries Fab 8 chip plant in Luther Forest in 2006, but AMD sold its manufacturing operations in 2009.

Today, GlobalFoundries makes chips under contract for about 150 electronics companies. AMD remains a major customer.

“The successful close of our amended wafer supply agreement with GlobalFoundries demonstrates the continued commitment from our two companies to strengthen our business relationship as long-term strategic partners, and GlobalFoundries’ ability to execute in alignment with our product roadmap,” said Rory Read, president and CEO of AMD. “This latest step in AMD’s continued transformation plays a critical role in our goals for 2014.”

AMD was hemorrhaging money when it sold its manufacturing operations to an investment fund in Abu Dhabi, but its XBox and PlayStation supply deals have recently helped it return to profitability.

“Outlook is good,” Prairie said. “We returned to profitability in the second half of last year and have set a goal for this year to deliver full-year revenue growth and profitability.”

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