AMD recently announced a major decision to acquire server manufacturing giant ZT Systems Inc. for $4.9 billion in a cash-to-stock deal aimed at strengthening its presence in data center technology and further intensifying its competitive landscape with Nvidia Corp.
ZT Systems, a West Kaucas, New Jersey-based company, confirmed in the announcement that it will become a key member of AMD's Data Center Solutions business group in the future. AMD is committed to retaining ZT's core design and customer support teams, while considering divesting its manufacturing division to optimize resource allocation. The total transaction value also includes $400 million in potential payments based on certain future milestones.
AMD's stock price climbed as quickly as 2.5% in pre-market trading following the announcement, and the market was optimistic about the acquisition. ZT Systems is known for its deep experience building high-performance server computers for large data centers that are investing heavily in emerging artificial intelligence (AI) technologies to pave the way for digital transformation.
AMD CEO Lisa Su said the acquisition will "significantly enhance our competitiveness in the field of data center AI systems." AMD has a clear eye on market leader Nvidia, which dominates the field of AI-enabled data center equipment. AMD is accelerating the pace of innovation in software and hardware capabilities to compete more closely with NVIDIA's product line and promote the widespread adoption of its silicon products.
Figure: AMD acquires ZT System (Source: Bloomberg)
As the second-largest supplier in the graphics processor market, AMD understands the central role of graphics processors in AI software development. Over the past year, the company has invested more than $1 billion to expand its footprint in the AI market. Last month, AMD also announced the acquisition of Silo AI for $665 million, further enriching its AI model manufacturing capabilities.
AMD, located in Santa Clara, California, is seen as Nvidia's strongest rival in the field of AI processors. The company expects its latest MI series accelerator chips to generate more than $4.5 billion in new revenue this year, which is ahead of many other competitors but still far from the $100 billion Nvidia expects to generate in data center revenue this fiscal year.
NVIDIA's success is due in part to the full range of solutions it provides, including chips, networks, servers, software, and services, which together drive the widespread adoption of AI technology in all areas of the economy. Under the leadership of Lisa Su, AMD has also shown a firm determination to make all-round efforts in the field of AI.
AMD shares edged up less than 1% during the New York trading session on Friday, and while the stock has not moved much overall so far this year, its long-term solid performance has pushed its market value to a high of $240 billion, more than double the market value of its main rival Intel Corp.
