AMD copy-pastes 6 GW chips-for-stock deal in new Meta agreement

The House of Zen signed a nearly identical deal with OpenAI last fall

AMD just signed a mega chip deal with Meta that appears almost identical to the one it signed with OpenAI last fall. And just like all cross-industry agreements between AI and chip makers of late, this one comes with some circular financing, too. 

Meta this morning announced it had agreed to purchase 6 gigawatts worth of custom Instinct GPUs from AMD. The first 1 GW tranche of the chips will go to Meta in the second half of this year, and will consist of custom GPUs based on AMD's MI450 architecture. An AMD spokesperson told us that the initial set of chips being shipped to Meta marks the first deployment of custom AMD AI GPUs. 

The deal isn't ending with custom GPUs, though, and will also see Meta become the "lead customer" for the company's sixth generation EPYC CPUs, the Venice and Verano chips specifically designed for the types of AI workloads Meta wants to put them on. 

Meta said that the deal is part of its Meta Compute initiative to speed up the development of its planned AI datacenter fleet, and that AMD is one of several hardware partners it's working with to develop a "portfolio approach." 

As is often the case with these sorts of deals, there's a lot of financial back-scratching going on.

AMD has issued Meta a warrant to buy up to 160 million shares of its common stock – about 10% of the total outstanding shares, which sit at 1.63 billion – in various tranches at a steeply discounted price of $0.01 per share. These shares vest only as Meta buys more computing capacity, with the first one coming available after Meta buys 1 GW of chips, which is expected in the second half of this year. The final tranche vests only if AMD's stock price hits $600. AMD shares jumped on news of the Meta deal, but they're still only valued at $211 as of writing. 

We asked AMD about the circular nature of the deal, and a spokesperson explained that it's all meant to incentivize a close partnership while imposing minimal risk on AMD shareholders. "This structure ensures that Meta has the incentive to collaborate with us even more deeply than our previous work," AMD explained. "The warrants are completely performance-based, AMD must do well, and our shareholders must do well in order for these warrants to vest including our stock price being at $600/share at the last vest."

The deal is practically identical to the one AMD offered OpenAI last October. That deal, which was also for 6 GW worth of GPUs, similarly included a warrant for up to 160 million AMD common stock shares structured to payout once certain targets were met.

AMD's deals with Meta and OpenAI also came shortly after the pair struck large-scale chip deals with Nvidia, too. 

"The two companies (OpenAI and Meta) with the most ambitious AI infrastructure plans have committed to 12 GW of AMD GPU," AMD told us. "That puts AMD in a position to gain significant market share." 

Alternatively, it puts AMD in a precarious position should the AI bubble eventually pop.

Several valuations have been assigned to the deal, but both Meta and AMD declined to put a price tag on the transaction when asked. 

Nonetheless, "we expect to generate double-digit billions of revenue per gigawatt over the course of the 6 GW agreement," the AMD spox told us. As long as the AI-go-round keeps going round and round. ®