(copy from google_LILY_CHAN)

Sourcing Analytics

Explore and Select Suppliers Globally

AMD

Jeffrey Zhang

Rutgers Business School

Fall 2025

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AMD Overview

AMD (Advanced Micro Devices) is a global semiconductor company that designs high-performance CPUs, GPUs, and AI chips for PCs, data centers, and gaming.

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Where does AMD source their chips from?

AMD designs its chips but outsources manufacturing mainly to TSMC in Taiwan (and its new fab in Arizona), with some older products still made by GlobalFoundries.

How your Nvidia and AMD graphics cards are made

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Sourcing Analytics

Supplier intelligence: Explore and select suppliers globally.
Bargaining power analysis: Measure leverage & negotiation power.
Supplier benchmarking: Compare suppliers’ pricing, risks, and production capacity.

World Map Graphic Vectors Editable Slides - SlideModel

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Assessing Needs & Supplier Selection Criteria

Align supplier selection criteria with the firm’s strategic objectives

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Assess Needs and Supplier Selection Criteria

Methodologies:
- Industry trend: potential and risk.
- Competition positioning: strengths and weaknesses
- Breakdown analysis: identify strategic priorities

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Semiconductor Industry Trend

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US is most dominant player, leading in revenue and profit. Followed by Taiwan, China, and South Korea.

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AMD's global competitors

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TSMC holds the largest market share in the industry,

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Profit frontier

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Nvidia leads in operating margin and total revenue

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COGS is the major cost driver

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A revenue breakdown shows Nvidia's biggest cost drivers are COGS making up 50.65%, and Net Income making up about 6.36% of revenue.

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Nvidia Supplier Selection Criteria

Manufacturing capability: Ability to produce at advanced process nodes with high yield, consistent quality, and on-time delivery.
Cost and scalability: Competitive pricing today, plus capacity that can scale with demand for CPUs, GPUs, and data center products.
Technology alignment: Roadmaps that match AMD’s needs for leading-edge lithography, packaging, and reliability over the product life cycle.
Supply chain resilience: Multiple sites, strong business continuity plans, and geographic diversification to reduce disruption risk.
Ethics and compliance: Adherence to AMD’s supplier code of conduct, global regulations, environmental standards, and data security expectations.

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Supplier Intelligence

Explore and identify potential suppliers globally

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Supplier Intelligence

Steps:
- Where to find them?
- Industry trend and stability.
- Industry concentration & competition intensity – competitive vs. monopolized.

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Where to look for semi-conductor suppliers?

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As seen in the chart, the US has the highest concentration of revenue in the semiconductor industry.

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Where to look for semi-conductor suppliers?

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This bar chart shows that the US is the leader in semiconductors. Taiwan, China, South Korea trail behind but with a significant gap in revenue.

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Industrial Trend - Semiconductors

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US is most dominant player, leading in revenue and profit. Followed by Taiwan, China, and South Korea.

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Industry Concentration

Major players? Competitive or monopolized?

US, Taiwan, South Korea

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Concentration and Competition Intensity - US

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Nvidia, Intel, Broadcom, and Qualcomm take up significant market share. This makes the semiconductor market very competitive and also high barriers to entry.

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Concentration and Competition Intensity - Total Revenue, Taiwan vs South Korea

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Taiwan's leading semiconductor firm is TSMC, while South Korea's leading firm is SK Hynix. They both take up more than half of the market share in their respective country.

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Global Semiconductors Suppliers

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Since TSMC is top notch for manufacturing GPUS, it would be mutually beneficial for both firms if TSMC manufactures AMD's GPUs. Both companies win by having those synergies. AMD designs, while TSMC manufactures.

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Global Semiconductors Suppliers

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TSMC supplies chips to AMD, allowing each company to focus on its core competencies.

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Potential Suppliers (Chips) for AMD

TSMC
NVIDIA
INTEL
BROADCOM
QUALCOMM
MICRON

TSMC - Company Overview | Companies Explained 【Inte l酷睿i5 9400】i5 9400_i5 9400参数_i5 9400上市时间_i5 9400价格-太平洋产品报价 Micron hits record high as AI demand powers strong forecast | Reuters

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Company Details: TSMC

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Company Details: Nvidia

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Company Details: Intel

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Bargaining Power Analysis

What is my leverage? Who has the bargaining power?

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Bargaining Power Index (BPI)

BPI << 1, supplier has power, vice versa

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Example: AMD BPI with GPU Suppliers 2024

Semiconductors	AMD's Spend ($M)	Suppliers’ Revenue ($M)	BPI
IC total	~24,144	—	—
TAIWAN SEMICONDUCTOR MANUFACTURING CO (TSMC)		88,408	3.66
Nvidia (NVDA)		60,922	2.52
Intel (INTC)		53,101	2.20
Broadcom (AVGO)		51,574	2.14
Qualcomm (QCOM)		38,962	1.61
Micron Technology (MU)		25,111	1.04

AMD has power over all suppliers

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Supplier Benchmarking

Compare suppliers’ pricing, profitability, health and production capability

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Supplier Benchmarking

Steps:
- Pricing / profitability analysis: pricing, profitability, efficiency.
- Financial health analysis: short / long-term liabilities and risks.
- Production & supply chain capabilities.

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Pricing / Profitability Analysis

Pricing: Gross margin, value added (e.g., technology)
Profitability: Net margin.
Ideal suppliers: Attractive pricing and very profitable.
Deceiving suppliers: Attractive pricing but barely profitable.

AI-Powered Intelligent Supply Chain Management (SCM) | NVIDIA

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Pricing and Profitability

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TSMC and Qualcomm much more profitable than Intel for potentially supplying GPU's/AI chips to Nvidia

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Enterprise Trend - TSMC, Nvidia, Intel

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TSMC tends to be profitable and stable, although Nvidia saw more growth in gross margin in recent years. Intel is not very profitable and has been generally declining the past few years.

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Enterprise Trend - TSMC, Nvidia, Intel

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TSMC shows the strongest liquidity and lowest leverage, indicating financial resilience and bargaining power, while Intel’s higher debt and weaker liquidity suggest tighter finances. Nvidia is very similar to TSMC with the exception of constantly having a higher current ratio

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Financial Health Analysis: Short-term sweets vs. Long-term crisis

For critical parts, you need the suppliers to have a rock-solid financial health.

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A typical trap: good one-time deal and long-run crisis.

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Liabilities vs. Equity

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TSMC and Nvidia maintain stronger equity positions with lower long-term liabilities, while Intel shows higher leverage due to a larger share of non-current debt relative to equity, indicating greater financial risk.

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Enterprise Comparison - Current ratio, Liability/asset ratio, Long term debt ratio

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NVIDIA shows the strongest liquidity, Intel relies more heavily on debt with tighter liquidity, and TSMC maintains a balanced middle-ground on both liquidity and leverage.

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Enterprise Trend - Size

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Based on the provided financial trend charts from 2016 to 2024, Taiwan Semiconductor Manufacturing Company Limited consistently shows the strongest growth and highest values across Total Revenue, Operating Income, Profit before Tax, and Net Income. Following closely behind TSMC is Nvidia. while Intel exhibits more volatile and generally lower financial results, seeing significant declines in 2023 and 2024.

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Property, Plant and Equipment

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Intel Corporation and Nvidia have two of the largest absolute production capacity (PP&E in Million USD), while Taiwan Semiconductor Manufacturing Company Limited show a greater relative reliance on physical assets (higher PP&E/Total Assets ratio).

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Supplier Score Sheets

Best supplier(s) meeting the selection criteria

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Summary Score Sheet

	TSMC (Taiwan Semiconductor Manufacturing Co.)	Intel Corporation	Nvidia
Innovative, technological capability	Excellent	Good	Excellent
Production / supply chain capability	Excellent	Fair	Good
Pricing	Fair	Good	Fair
Profitability	Excellent	Poor	Excellent
Bargaining power	Excellent	Fair	Excellent
Financially healthy / robust	Excellent	Good	Excellent
Leaks & competition	Good	Excellent)	Good

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Suggested Suppliers for AMD Chips

TSMC – Recommended: TSMC is recommended because it has the most advanced chip factories, already makes many of AMD’s processors, and can reliably produce large volumes with strong quality.
Intel Foundry Services – Cautiously Recommended: Intel can be considered for a small portion of AMD’s production to add backup capacity in the U.S. and Europe, but it is also a major competitor, so depending on it too much would create strategic risk.
NVIDIA – Not Recommended: NVIDIA is not recommended because it focuses on designing its own chips and relies on outside factories for production, so it does not operate chip-making facilities that AMD could realistically use as a manufacturing supplier.

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(copy from google_LILY_CHAN)

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