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GlobalFoundries stock (NASDAQ: GFS) rose about 1% in premarket trading on Monday after Advanced Micro Devices (NASDAQ: AMD), the company’s former parent and still a key client, increased the size of a previous order to buy more silicon wafers from the company for a longer period of time.
According to a regulatory filing Thursday, AMD, whose stock price was up 0.6 percent in premarket trading, will now purchase approximately $2.1 billion of silicon wafers from GlobalFoundries through 2025 under an amended agreement.The increased order comes as chip shortages persist, owing largely to the shift to a digital ecosystem accelerated by Covid-19.
With existing supplies being depleted as the pandemic spreads and new capacity taking time, AMD is attempting to capitalize on a seller’s market. AMD had previously planned to purchase $1.6 billion in wafers between 2022 and 2024, representing a 30% increase.
Wafers are large silicon discs on which computer chips are manufactured.GlobalFoundries, which was spun off from AMD in 2009, also has major customers such as Qualcomm (NASDAQ: QCOM), NXP (NASDAQ: NXPI), and Broadcom (NASDAQ: AVGO). In October, it was re-listed on the Nasdaq. Meta Platforms (NASDAQ: FB), a subsidiary of Facebook, chose AMD chips for its data centers last month.
AMD, which has proven to be a worthy competitor to Intel (NASDAQ: INTC), is now competing in supercomputing markets against larger rivals such as Nvidia (NASDAQ: NVDA).