[Manuel Calavera]

Can AMD handle supply? Actually, that’s where the amended WSA comes in

The amendment is of a very material nature to the success of AMD (and Ryzen) but before we get into that it is interesting to point out that this is one of the more significant amendments to the WSA that has happened so far. It came almost a year after the amendment of 2015 and was officially filed as the “The Sixth Amendment to the Wafer Supply Agreement”.
The initial point of the contract was to make sure that AMD continued to buy a set quantity of wafers from the foundry every year and not simply shift to other foundries after the spin off. With almost every amendment AMD has attempted to re-adjust the grip of the WSA and paid corresponding monetary compensation according to the terms for doing so. Unlike the previous amendments however, this particular contract changes quite a few things for the duration it will stay active. The original Wafer Supply Agreement stated that it will stay active no longer than the year 2024, and this particular amendment will end on 2020. One thing is for certain though, it would seem that AMD is not as confident in the capabilities of GlobalFoundries as it once might have been.
Zen is critical to AMD’s success and quite possibly its ability to stay afloat going forward. It can be argued that the company remaining a going concern depends on Zen not being a failure. With that context in mind, it is easy to see why AMD might be looking to diversify its options in case GlobalFoundries does not perform.
Since GlobalFoundries and Samsung share the same 14nm process, it is more probable that the amendment will be utilized to harness TSMC’s ability to create high powered SOCs at the 16nm FinFET node. This amendment will also serve as a fail safe option for AMD’s Zen processors – which are due to land sometime in early 2017. So basically:

• AMD is free to source wafers from foundries that are not GlobalFoundries for any product it sees fit, provided it pays a penalty for every time this happens.
• It will give the company an unparalleled and unprecedented capability to not only hedge its bet with GloFo but make sure it has a fall back if the foundry does not perform. This means that as far as the supply risk is concerned, Ryzen is fairly hedged.

You can also read our complete and thorough breakdown of the amended WSA agreement but I think readers will be able to see what I am talking about when I say that AMD has never been in a better position to support high demand for its products. With this amended WSA in place, the skys the limit as far as its ability to meet demand goes. I’ll end on the same note I began, AMD has made its move and it is most definitely a check. Whether this is also consequently a ‘mate’ for a colossal AMD win, depends entirely on how Intel chooses to react to it. Will it cut its pricing across the board in response or will it chose to do what it has always does with AMD processors (which is to say, nothing) and face the consequences?

http://wccftech.com/amd-calls-check-move-intel/