What happened
Advanced Micro Devices (AMD) agreed to supply Meta Platforms with up to $60 billion worth of AI chips over five years, a deal potentially exceeding $100 billion. The agreement includes six gigawatts' worth of chips, starting with one gigawatt of AMD's MI450 flagship hardware in the second half of this year, and custom central processing units. Meta will also receive a warrant for 160 million AMD shares, vesting with performance targets up to $600, allowing Meta to purchase up to 10% of the chip firm.
Why it matters
Meta secures critical AI chip supply, diversifying its vendor base and mitigating reliance on a single provider. This agreement, which includes custom CPUs and a significant equity stake, locks in future capacity and influences AMD's strategic direction. Procurement teams face increased complexity in managing multi-vendor AI infrastructure, while investors note the return of "circular deals" where customers gain equity in suppliers, a pattern seen in AMD's prior OpenAI pact.
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