AMD acquires server manufacturer ZT Systems for $4.9 billion
Advanced Micro Devices (AMD) has announced its intention to acquire server manufacturer ZT Systems. The deal, valued at $4.9 billion, is part of AMD's strategy to enhance its artificial intelligence (AI) chips and hardware portfolio. This move positions AMD in direct competition with NVIDIA, another major player in the tech industry. The acquisition will be financed through a combination of cash and stock, with 75% being paid in cash and the remaining 25% in stock shares.
Acquisition to boost AMD's AI capabilities
The acquisition of ZT Systems is a strategic move by AMD to meet the growing computing demands of AI. This technology requires thousands of chips working in unison for effective data processing. By acquiring ZT Systems, AMD aims to enhance its ability to assemble these complex server systems. Following the announcement, AMD's shares saw a nearly 3% rise in premarket trading, indicating positive investor sentiment toward this development.
AMD CEO highlights importance of AI systems
AMD CEO Lisa Su emphasized the significance of AI systems in a recent interview with Reuters, stating that they are the company's top strategic priority. The integration of ZT Systems's engineers will enable AMD to expedite testing and deployment of its latest AI graphics processing units (GPUs). This move is particularly beneficial for meeting the demands of large-scale cloud computing entities like Microsoft.
AMD to sell server manufacturing business post-acquisition
Post-acquisition, AMD plans to divest its server manufacturing business as it does not intend to compete with firms like Super Micro Computer. This decision was confirmed by Su, who also revealed that discussions with potential buyers have not yet begun. Frank Zhang, CEO of ZT Systems, will join AMD and report directly to Forrest Norrod, the company's data center chief.
AMD to retain key ZT Systems personnel post-acquisition
AMD plans to retain approximately 1,000 engineers from ZT Systems, a company with an estimated workforce of 2,500. Currently generating annual revenue of around $10 billion, ZT Systems is expected to significantly contribute to AMD's financial performance by the end of 2025. The acquisition deal is projected to close in the first half of 2025, with an additional period of 12-18 months anticipated for the sale of the manufacturing business.
