Amazon has signed a supplier financing agreement allowing it to borrow up to $80 billion, approximately 106,864 billion won, against hardware assets it purchases. This is its latest measure to secure financial flexibility as it invests hundreds of billions of dollars in artificial intelligence (AI) infrastructure.
According to Bloomberg and other international media on October 31, local time, the secured lending arrangement disclosed in Amazon's quarterly report following its third-quarter earnings announcement allows the company to draw funds at its discretion from early 2027 through the third quarter of 2028.
Lenders will obtain security interests in certain assets purchased in connection with the arrangement. However, Amazon did not specify the collateral assets in its filing.
Until now, Amazon has financed data center construction and semiconductor purchases using cash generated by its cloud computing and retail businesses, along with the largest corporate bond issuance in its history.
However, Amazon has largely avoided financing methods used by some competitors. These include sharing data center construction costs with investment firms and agreements to lease semiconductors purchased by other companies.
Many of these transactions have centered on Nvidia semiconductors, which are used primarily for AI workloads. Nvidia semiconductors are often the largest single cost item in building new data centers.
Matt Garman, chief executive of Amazon Web Services (AWS), told international media: “With such an enormous opportunity ahead of us, we are also exploring ways to finance responsibly so that we can expand our business on the greatest possible scale for customers.”
Garman added that, as Amazon expands aggressively, “we are working with partners to find ways to balance cash flow.”
In its quarterly results, Amazon disclosed a larger increase in capital expenditure than the market had expected. This spending resulted in a net free cash outflow of $42.4 billion, approximately 56,637.9 billion won, over the year through the end of the third quarter.
Related articles
Amazon's total spending commitments also rose substantially. Total commitments, including debt and interest, leases that have not yet commenced, obligations to acquire property and equipment, and other items, reached $883 billion, approximately 1,179,511.4 billion won, at the end of the third quarter.
This was 36% higher than three months earlier and more than double the level at the same point last year.
Original Korean article: ZDNet Korea
English brief by Korea Wind Intelligence, koreawindintel.com
