Meta to buy AI chips from AMD in $100-billion deal

Facebook owner Meta Platforms will buy artificial intelligence chips from Advanced Micro Devices in a deal that also will give it the opportunity to buy up to a 10% stake of the chip company.

News of the AMD deal comes just days after Meta announced a long-term partnership in which it will use millions of chips and other equipment from Nvidia for its artificial-intelligence data centers.

Meta will buy AMD’s latest chips, the MI450, to help power data centers. The 6-gigawatt agreement will deliver shipments supporting the first gigawatt deployment during the second half of the year. The agreement could be worth more than $100 billion.

AMD is looking to keep pace with Nvidia in the AI craze that’s widely viewed as the biggest tectonic shift in technology since Apple co-founder Steve Jobs unveiled the first iPhone.

Nvidia carved out an early lead in tailoring its chipsets known as graphics processing units, or GPUs, from use in powering video games to helping train powerful AI systems, like the technology behind ChatGPT and image generators. Demand skyrocketed as more people began using AI chatbots. Tech companies scrambled for more chips to build and run them.

While the appetite for AI chips is still large, there are concerns about how much companies like Meta are spending on AI and whether they can make back their huge investments through higher profits and productivity in the future.

For Meta, the company has been pushing to revive its commercial AI efforts as it faces tough competition from rivals such as Google and OpenAI, maker of ChatGPT. In June, Meta made a $14.3-billion investment in AI data company Scale and recruited its chief executive, Alexandr Wang, to help lead a team developing “superintelligence” at the tech giant. And in December, Meta bought artificial intelligence startup Manus as the owner of Instagram continues an aggressive push to amp up AI offerings across its platforms.

AMD issued Meta a performance-based warrant for up to 160 million shares of its common stock at $0.01 apiece, structured to vest as long as certain milestones are achieved.

The first tranche vests with the initial 1-gigawatt of shipments, with additional tranches vesting as Meta’s purchases scale to 6 gigawatts.

Chapman writes for the Associated Press.