The agreement features a substantial stock incentive. AMD has granted Meta "a performance-based warrant" for up to 160 million shares of AMD common stock, which will vest as certain milestones related to Instinct GPU shipments are met.
The initial tranche of shares will vest upon the first gigawatt shipments, with further tranches increasing as Meta acquires more computing capacity. Essentially, AMD is compensating Meta with shares of its company in return for purchasing its GPUs. This deal mirrors the partnership between OpenAI and AMD announced in October, which includes the same 6 gigawatt chip offering and a 10% share of AMD in exchange.
As reported by the Wall Street Journal, the agreement is valued at over $100 billion, with each gigawatt of computing alone generating tens of billions in revenue for AMD. Concerning the stock arrangement, AMD has reportedly provided Meta with warrants to purchase up to 160 million shares at $0.01 each. For Meta to receive the full stock award, AMD's share price must reach $600, while it is currently trading just below $200.
The announcement signals that AMD is keeping pace with larger rival Nvidia, which disclosed its own tie-up with Meta last week. And it shows that broader spending on AI equipment continues to accelerate, even as some investors express fears of an investment bubble.
For Meta, the AMD deal will bring components that are customised to its needs. It also will have the ability to influence how those semiconductors are designed going forward.
“Our ambitions are pretty high,” said Santosh Janardhan, Meta’s head of global infrastructure, who oversees the company’s data centres and their technical architecture. Meta plans to forge ahead with its own in-house custom AI chip efforts and will continue to purchase from Nvidia, with the chips being used to support different workloads.