Meta's Chip Deal with AMD

Meta has agreed to a multi-billion-dollar deal with AMD to buy customised AI chips, a move that could eventually give Meta up to a 10% stake in the chipmaker. As part of the deal, AMD issued Meta a performance-based warrant allowing it to buy up to 160 million AMD shares at a very low price, depending on how many chips Meta purchases over time. News of the agreement caused AMD’s share price to jump sharply. The deal is similar to one AMD previously made with OpenAI and reflects growing demand for AI chips as tech companies rapidly expand their artificial intelligence systems.

The agreement also shows that big tech companies like Meta are trying to reduce their reliance on Nvidia, currently the dominant AI chip supplier, by working more closely with AMD and developing their own chips. AMD will build a custom version of its MI450 chips mainly for running AI models, rather than training them, and the chips will require huge amounts of power. Meta plans to nearly double its AI infrastructure spending this year to as much as $135bn, highlighting how expensive the global AI race has become. These massive costs are pushing even cash-rich tech firms to explore creative financing deals and raise money through bonds and other markets.