AMD has announced plans to acquire server builder ZT Systems for $4.9 billion, with the transaction composed of 75% cash and the remainder in stock. This acquisition marks a significant move by AMD to expand its portfolio of artificial intelligence (AI) chips and hardware, positioning itself to better compete with Nvidia in the rapidly growing AI market. The deal will also allow AMD to leverage ZT Systems’ engineering capabilities to accelerate the testing and deployment of its AI GPUs, which are crucial for cloud computing giants like Microsoft.
AMD intends to divest the server manufacturing portion of ZT Systems after the deal closes, aiming to focus solely on AI chips rather than competing directly with other server manufacturers. The acquisition is expected to close in the first half of 2025, with ZT Systems contributing to AMD’s financial performance by the end of that year.
ZT Systems, currently generating around $10 billion in annual revenue, will bring approximately 1,000 engineers to AMD’s team. The move aligns with AMD’s strategic priority of enhancing its AI systems, as emphasized by CEO Lisa Su. AMD’s shares saw a nearly 3% increase in premarket trading following the announcement.
In contrast, Nvidia, which has evolved from a chip designer to a company that creates and sells entire data centers, is expected to generate $105.9 billion from its data center segment this year. AMD anticipates generating $4.5 billion in AI chip revenue in 2024, with customers including Microsoft and Meta Platforms.
Featured Image courtesy of FXTM
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