Facebook's parent company Meta has announced a major partnership with AMD to purchase artificial intelligence chips, potentially worth over $100 billion. The agreement also allows Meta to acquire up to 10% ownership in the chip manufacturer as both companies compete in the rapidly growing AI market.
The parent company of Facebook, Meta Platforms, has struck a massive agreement with Advanced Micro Devices to purchase cutting-edge artificial intelligence processors, with the deal potentially reaching more than $100 billion in value. The partnership also provides Meta with the option to acquire as much as a 10% ownership stake in the semiconductor manufacturer.
This major announcement follows closely behind Meta’s recent long-term collaboration with Nvidia, where the social media giant committed to utilizing millions of processors and additional hardware from the graphics chip leader for its AI-powered data facilities.
Under the new arrangement, Meta will purchase AMD’s newest MI450 processors to support its data center operations. The comprehensive 6-gigawatt contract includes initial shipments for the first gigawatt deployment scheduled to begin in the latter half of this year.
AMD is working to maintain competitiveness with Nvidia amid the artificial intelligence boom, which many industry experts consider the most significant technological transformation since Apple’s Steve Jobs introduced the original iPhone to the world.
Nvidia established an early advantage by adapting its graphics processing units, originally designed for video gaming, to train sophisticated AI systems like those powering ChatGPT and various image creation tools. As AI chatbot usage exploded, demand for these specialized chips surged, leading technology companies to compete aggressively for access to the hardware needed to develop and operate their systems.
Despite continued strong demand for AI processors, some analysts express concern about the enormous spending by companies like Meta on artificial intelligence technology and question whether these massive investments will generate sufficient returns through increased profits and productivity.
Meta has been intensifying its artificial intelligence initiatives as it battles fierce competition from rivals including Google and OpenAI, the company behind ChatGPT. Last June, the tech giant invested $14.3 billion in AI data firm Scale and brought on CEO Alexandr Wang to lead a team focused on developing “superintelligence” capabilities. In December, Meta acquired AI startup Manus as part of its aggressive strategy to enhance artificial intelligence features across Instagram and its other platforms.
As part of the deal structure, AMD has granted Meta performance-based warrants for up to 160 million shares of common stock at $0.01 per share, designed to vest when specific performance targets are met.
The warrant system includes an initial tranche that becomes available with the first 1-gigawatt shipment, followed by additional tranches as Meta’s processor purchases expand to the full 6-gigawatt capacity.
AMD stock prices surged more than 9% in pre-market trading on Tuesday following the announcement.