Advanced Micro Devices Inc. will sell artificial intelligence chips to Facebook owner Meta Platforms Inc. for $100 billion, boosting AMD’s dominance in artificial intelligence chip manufacturing.
This also gives Meta the opportunity to purchase up to 10% of AMD shares. Shares of the chipmaker rose.
AMD has had a significant presence in Central Texas since 1979. While the company is headquartered in Santa Clara, California, CEO Lisa Su runs the business out of Austin, where the company has about 3,700 employees and is growing with the recent announcement of a data center in nearby Rockdale.
Meta also has a presence in Austin, with a downtown office.
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Under the agreement, it will purchase AMD’s latest chip, the MI450, to help power data centers. Shipments from the 6 GW deal will support the first GW deployment starting in the second half of this year.
Earlier this year, AMD reached a similar chip-for-equity agreement with OpenAI. The makers of ChatGPT plan to use AMD chips to build multibillion-dollar data centers in Texas, New Mexico, Ohio and an as-yet-unspecified site in the Midwest.
The shift to AMD and other chipmakers comes as Nvidia Corp., the world’s most valuable company, raises the prices of its semiconductors. Companies such as Meta and OpenAI are long-term customers of Nvidia and have begun looking for alternatives as they build more data centers.
It gained an early lead in transforming its chipsets, known as graphics processing units, or GPUs, from being used to power video games to helping train powerful artificial intelligence systems, such as the technology behind ChatGPT and image generators. As more and more people start using AI chatbots, demand has skyrocketed. Tech companies are now scrambling to find chips to build and run them.
Wall Street investors are questioning whether the fast-growing artificial intelligence craze is an economic bubble about to burst due to the sheer size of the deals. As a costly industry, AI is dominated by a handful of companies that are expanding investments in each other. For example, just days before the AMD deal, Meta announced a long-term partnership to use millions of Nvidia’s chips and other equipment for its artificial intelligence data centers.
AMD shares rose more than 10% before the market opened on Tuesday and continued to rise in regular trading.
AMD issued performance warrants to Meta for up to 160 million shares of common stock at 1 cent per share, which can vest as long as certain milestones are achieved, the companies said.
