Foreign media including Reuters reported on the 24th (local time) that Meta, Facebook's parent company, signed an artificial intelligence (AI) chip supply contract worth about $60 billion with U.S. semiconductor corporations AMD.
Meta said it will purchase 6 gigawatts (GW) of AI chips over five years starting in the second half of this year. AMD plans to produce a customized "MI450" chip for Meta.
With this deal, Meta secured the right to acquire up to 10% equity in AMD. AMD agreed to provide performance-based stock warrants that allow Meta to buy up to 160 million AMD shares (about 10%) at $0.01 per share each time Meta places additional AI chip orders. The condition is AMD's stock price appreciation. Meta can receive the last tranche of shares only if AMD's stock price rises to around $600. AMD shares closed at $196.60 the previous day.
AMD Chief Executive Officer Lisa Su said Meta will secure the first equity in the second half of this year when 1 GW of AI chips ship. Su said, "In a sense, Meta is making a big bet on AMD, while also giving Meta the opportunity to participate in the upside if AMD shareholders deliver results." The warrants expire in Feb. 2031.
Major foreign media said the deal is a meaningful result for AMD, which has been trailing Nvidia in the AI chip market. A structure that grants the right to secure equity as a condition of purchasing AI chips is cited as the latest example of the "circular transaction" seen in the AI industry since last year. AMD signed a similar contract with OpenAI in Oct. last year.
Su said, "We will support one of the industry's largest AI buildout projects by providing high-performance, high-efficiency infrastructure optimized for Meta's operating environment, and position AMD at the center of global AI infrastructure expansion."
Meta said it will expand its AI infrastructure investment to as much as $135 billion this year to catch up with competitors such as OpenAI and Anthropic. Meta is currently planning to build 30 data centers, 26 of which will be built in the United States.
On news of the AI chip supply contract between the two companies, AMD shares jumped more than 14% in premarket trading.