Cirrus to Source $1.6B of Wafers in GF ‘Capacity Reservation’ Pact

Cirrus Logic will source wafers from GlobalFoundries under a “capacity commitment” and pricing agreement signed “under the backdrop of the current global supply environment,” said Cirrus Wednesday in an SEC filing. The agreement requires GF to supply and Cirrus to buy “a defined number of wafers on a quarterly basis,” 2022 through 2026, in return for Cirrus paying GF a $50 million “capacity reservation fee,” it said. GF would be required to pay Cirrus quarterly “shortfall payments” based on chip pricing if it “fails to deliver the required wafers within defined grace periods.” Cirrus expects to buy at least $1.6 billion worth of wafers under the agreement, said the filing. Cirrus won’t disclose pricing terms, other than “the prepaid and the reservation fee,” because “that's a bit sensitive in terms of competition and other things for us to talk specifically about,” said Chief Financial Officer Thurman Case on a fiscal Q1 call Wednesday for the quarter ended June 26. The agreement “secures for us a very significant increase in our wafer supply and allocation,” amid the current period of “really overwhelming demand and a lot of challenge to meet that demand,” said Cirrus CEO John Forsyth. GF didn’t respond to questions Thursday.