Meta has struck a multi-billion-dollar chip deal with AMD that could see the Facebook owner take a 10 per cent stake, sending the US chipmaker’s shares soaring on Tuesday.
The social media giant said it will acquire customised chips with a total capacity of six gigawatts from AMD as it races to build and deploy its AI models.
AMD, chief executive Lisa Su said each gigawatt of compute is worth double-digit billions under the deal.
AMD issued Meta with a performance-based warrant, giving it the option to acquire up to 160m AMD shares in tranches at an exercise price of $0.01 as Meta places successive processor orders.
The shares-for-chips structure is the latest circular transaction in AI hardware, echoing AMD’s October deal with OpenAI where a 10 per cent stake could accrue over time.
AMD shares jumped as much as 14 per cent in New York on Tuesday, pushing the group’s market capitalisation to $342bn.
The deal is another sign Big Tech wants options beyond market leader Nvidia, which last week announced its own multiyear Meta agreement to supply “millions” of chips over the coming years.
Su said Meta will receive its first tranche of AMD shares in the second half of this year when the first gigawatt ships, with warrant terms also tied to share price thresholds that climb to $600 for the final tranche.
“In some sense, Meta is taking a big bet on AMD, and we are giving Meta a chance to participate if AMD shareholders do well. From a financial standpoint, each gigawatt of compute is worth double-digit billions,” she said.
Su said the warrant structure would help “make sure that we are always a clear seat at the table when [Meta] are thinking about what they need next”.
Meta, chief executive Mark Zuckerberg said he expected AMD to be “an important partner for many years to come”.
Meta has said it will almost double its AI infrastructure spending this year to as much as $135bn, as US tech giants sprint to build data centres to train and run AI software.
Meta is already one of AMD’s biggest AI chip customers, and it is not pretending one vendor can handle everything.
Meta, head of infrastructure Santosh Janardhan said: “We don’t believe that a single silicon solution will work for all of our workloads. There’s a place for Nvidia, AMD and our own custom silicon as well. We need all three.”
Under the deal, AMD will build a custom version of its MI450 AI chips for Meta, primarily for inference workloads in which trained models are run at scale.
The chips will need six gigawatts of power, equivalent to what five million US households use in a year, which is a tidy reminder that AI is also an electricity business.
As Big Tech burns cash on infrastructure, increasingly creative funding structures are popping up, along with warnings about circular financing.
AMD, for example, helped data centre builder Crusoe secure a $300m loan from Goldman Sachs by offering a backstop guaranteeing use of its chips if Crusoe cannot find customers in Ohio.
Tech giants such as Meta, once famously flush with cash, are now looking to bond and equity markets or to trim capital returns to fund unprecedented build-outs.
Meta raised $30bn in October in its biggest bond sale to date, because even the loudest AI hype still must clear a balance sheet.
