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Meta to buy $60 billion in GPUs but might end up owning $35 billion share in AMD.
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Keeping up with all the megabucks deals going on right now in AI land is pretty much a full-time job. But for what it's worth, here's another doozy that involves silly amounts of money and a whiff of just the sort of cannibalistic circularity that makes the whole situation so unnerving. AMD and Meta have announced a new strategic alliance in which Meta buys $60 billion worth of AMD GPUs, but also might end up owning 10% of AMD into the bargain, a stake currently valued at around $35 billion.
So, yeah, that's seemingly $60 billion being paid out by Meta, only to effectively get $35 billion back, along with a whole hill of GPUs for making AI slop. First up, however, it's worth noting that those dollar figures are estimates. The $60 billion is a Reuters estimate of the cost of what the official announcement explicitly mentions, namely 6 gigawatts worth of AMD Instinct GPUs for AI processing over a five-year period.
As for the $35 billion, that's based on details in the release and AMD's current market value. Long story short, if certain stipulations are met, including the number of AMD Instinct GPUs shipped to Meta, and Meta itself "achieving key technical and commercial milestones", then Zuckerberg's company has the right to buy up to 160 million AMD shares.
The slightly more detailed version is that if AMD issues all 160 million shares to Meta, that would then represent a roughly 10% holding in the company. Right now, AMD is worth about $350 billion, and the maths is easy enough to see that 10% of $350 billion is $35 billion.
Of course, much can change over the next five years in terms of AMD's overall value. Likewise, the conditions for the share issue may never be met. But the interesting bit here, arguably, is that those shares will likely be sold to Meta almost for free. According to reports, the price per share is likely to be $0.01, compared to the current market price of over $210 per share.
The reason why AMD doesn't just give Meta the shares for free comes down to accounting practices and how shares are issued. The $1.6 million Meta would have to pay for the shares is largely incidental. The point is that if the conditions are met, Meta ends up owning about 10% of AMD in return for buying a bucket load of GPUs.
At this juncture, you might wonder why AMD doesn't just sell the GPUs to Meta more cheaply. Firstly, it makes AMD look less profitable. It would hurt things like AMD's profit margins and cash flow, which gets the megabucks bean counters a...Read more: Full article on www.pcgamer.com
What do you think about this?
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Keep up to date with the most important stories and the best deals, as picked by the PC Gamer team.
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From the creators of Edge: A weekly videogame industry newsletter with analysis from expert writers, guidance from professionals, and insight into what's on the horizon.
Hardware nerds unite, sign up to our free tech newsletter for a weekly digest of the hottest new tech, the latest gadgets on the test bench, and much more.
Sign up to our new Switch 2 newsletter, where we bring you the latest talking points on Nintendo's new console each week, bring you up to date on the news, and recommend what games to play.
Subscribe for a weekly digest of the movie and TV news that matters, direct to your inbox. From first-look trailers, interviews, reviews and explainers, we've got you covered.
Get sneak previews, exclusive competitions and details of special events each month!
Keeping up with all the megabucks deals going on right now in AI land is pretty much a full-time job. But for what it's worth, here's another doozy that involves silly amounts of money and a whiff of just the sort of cannibalistic circularity that makes the whole situation so unnerving. AMD and Meta have announced a new strategic alliance in which Meta buys $60 billion worth of AMD GPUs, but also might end up owning 10% of AMD into the bargain, a stake currently valued at around $35 billion.
So, yeah, that's seemingly $60 billion being paid out by Meta, only to effectively get $35 billion back, along with a whole hill of GPUs for making AI slop. First up, however, it's worth noting that those dollar figures are estimates. The $60 billion is a Reuters estimate of the cost of what the official announcement explicitly mentions, namely 6 gigawatts worth of AMD Instinct GPUs for AI processing over a five-year period.
As for the $35 billion, that's based on details in the release and AMD's current market value. Long story short, if certain stipulations are met, including the number of AMD Instinct GPUs shipped to Meta, and Meta itself "achieving key technical and commercial milestones", then Zuckerberg's company has the right to buy up to 160 million AMD shares.
The slightly more detailed version is that if AMD issues all 160 million shares to Meta, that would then represent a roughly 10% holding in the company. Right now, AMD is worth about $350 billion, and the maths is easy enough to see that 10% of $350 billion is $35 billion.
Of course, much can change over the next five years in terms of AMD's overall value. Likewise, the conditions for the share issue may never be met. But the interesting bit here, arguably, is that those shares will likely be sold to Meta almost for free. According to reports, the price per share is likely to be $0.01, compared to the current market price of over $210 per share.
The reason why AMD doesn't just give Meta the shares for free comes down to accounting practices and how shares are issued. The $1.6 million Meta would have to pay for the shares is largely incidental. The point is that if the conditions are met, Meta ends up owning about 10% of AMD in return for buying a bucket load of GPUs.
At this juncture, you might wonder why AMD doesn't just sell the GPUs to Meta more cheaply. Firstly, it makes AMD look less profitable. It would hurt things like AMD's profit margins and cash flow, which gets the megabucks bean counters a...Read more: Full article on www.pcgamer.com
What do you think about this?