Today's video focuses on Advanced Micro Devices (AMD 4.92%) and its recent agreement with GlobalFoundries (GFS +3.56%) to buy more chips. Here are some highlights from the video.
- GlobalFoundries is a semiconductor manufacturer that produces chip wafers for numerous companies, including AMD. GlobalFoundries went public on Oct. 28 and has made over 40% returns to investors year to date.
- On Dec. 23, AMD amended a previous agreement with GlobalFoundries regarding wafer purchases over the next few years. Previously, AMD would have purchased $1.6 billion in wafers from 2022 to 2024. In the new agreement, AMD will buy $2.1 billion in wafers from 2022 to 2025.
- Such agreements benefit both the chip company and the manufacturers. They promise manufacturers a known revenue amount for the next few years and also assure chip companies with a minimum inventory amount. These known values can eliminate some volatility in market conditions.
Click the video below for my full thoughts and analysis.
*Stock prices used were the midday prices of Dec. 28, 2021. The video was published on Dec. 28, 2021.
