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AMD Looks for Ways to Improve Its Chip Shortage Problems

By Jose Najarro – Dec 29, 2021 at 10:00AM

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Can this help AMD with its constant revenue growth?

Today's video focuses on Advanced Micro Devices (AMD -2.32%) and its recent agreement with GlobalFoundries (GFS -0.99%) 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.

Jose Najarro owns Advanced Micro Devices. The Motley Fool owns and recommends Advanced Micro Devices. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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