Advanced Micro Devices Inc (AMD) has agreed to buy server maker ZT Systems Inc in a cash and stock transaction valued at US$4.9 billion, adding data center technology that would bolster its efforts to challenge Nvidia Corp.
ZT Systems, based in Secaucus, New Jersey, would become part of AMD’s Data Center Solutions Business Group, it said in a statement yesterday.
AMD would retain the business’ design and customer teams and look to sell the manufacturing division. The deal price includes a contingent payment of US$400 million based on certain milestones.
Photo: Bloomberg
AMD shares rose 2.5 percent in premarket trading yesterday after the news.
Closely held ZT has extensive experience making server computers for owners of large data centers — the kind of customers that are pouring billions of dollars into new artificial intelligence (AI) capabilities.
The acquisition would “significantly strengthen our data center AI systems,” AMD chief executive officer Lisa Su (蘇姿丰) said in the statement.
The company has its sights set on Nvidia, the runaway leader in the market for data center gear needed to support AI computing. AMD is adding software and hardware capabilities that would better match the breadth of Nvidia’s offerings and speed up the uptake of its chips.
AMD is the second-biggest provider of the graphics processors that have become so vital to developing AI software. The company has spent more than US$1 billion in the past 12 months to expand its reach in that market.
Last month, the company agreed to buy Silo AI for US$665 million to add a maker of artificial intelligence models.
Santa Clara, California-based AMD is seen as Nvidia’s closest rival in AI processors.
Its new MI range of accelerator chips would bring in more than US$4.5 billion of new revenue this year, the company has projected.
That puts it ahead of all other challengers to Nvidia, but still way behind. Analysts expect Nvidia to generate US$100 billion in data center revenue this fiscal year.
Part of Nvidia’s expansion has been fueled by offering chips, networking, servers, software and services, all aimed at making AI use more pervasive in the economy. Under Su’s leadership, AMD is showing a commitment to match that reach.
AMD shares rose less than 1 percent in New York trading on Friday, leaving the stock little changed this year, but gains over recent years have pushed its market value to US$240 billion, more than twice that of longtime rival Intel Corp.
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