It became known that Advanced Micro Devices (AMD) Inc. has reached an agreement on the implementation of the deal for the acquisition of ZT Systems, which specializes in the implementation of server manufacturing activities.
The value of the mentioned deal will be $4.9 billion. It is known that AMD will acquire the server maker in cash and stock. The company will use ZT Systems technologies in data centers. In this case, AMD will be able to strengthen its position in terms of its ability to compete in the market with Nvidia, one of the main beneficiaries of the so-called artificial intelligence boom, which market value exceeded $3 trillion this summer.
ZT Systems is based in Secaucus, New Jersey. After the implementation of the deal, the server manufacturer will become part of the AMD Data Center Solutions Business Group. The company’s technologies, as above-mentioned, will be used to develop solutions for data centers. The relevant information is contained in the statement, which was published on Monday, August 19. AMD will retain the business’s design and customer teams. Moreover, the company intends to sell the manufacturing unit.
The cost of the deal to acquire the server manufacturer by AMD includes a contingent $400 payment million based on certain milestones. This business agreement is expected to be fully implemented by the end of the first half of next year.
ZT System has significant experience in developing server computers for owners of large data centers, many of whom are investing billions of dollars in new artificial intelligence capabilities.
AMD chief executive officer Lisa Su in a call with investors on Monday says that the acquisition of the ZT System will strengthen the company’s AI infrastructure deployment. In this case, it means artificial intelligence systems for data centers. Lisa Su also said that AI is the most transformational technology of the last 50 years and her company’s No. 1 strategic priority.
AMD is currently aiming to compete with Nvidia, which is an unambiguous leader in the gear market for data centers needed for computing using artificial intelligence. AMD is adding software and hardware capabilities that will better match the mentioned competitor’s product line. Also, appropriate efforts will accelerate the process of introducing chips from the firm.
AMD is currently the second-largest graphics processor supplier. The corresponding products have become critically necessary and, in a certain sense, vital for the development of software for artificial intelligence. Over the past 12 months, the company has spent more than $1 billion to expand its presence in the corresponding market.
Last month, AMD agreed to acquire Silo AI, a developer of artificial intelligence models. The cost of this deal is $665 million.
AMD, based in Santa Clara, California, is Nvidia’s closest competitor. In this case, it means the ratio of positions in the area of production of artificial intelligence processors. AMD predicts that the new MI range of accelerator chips in the current year will bring revenue of more than $4.5 billion. The corresponding financial performance is likely to maintain the company in a position that can be described as leadership among Nvidia’s competitors. At the same time, the backlog continues to be large. According to analysts, this fiscal year Nvidia’s revenue from activities related to the supply of products for data centers will be fixed at around $100 billion. Against this background, competition from AMD is, in a sense, formal. The company, headed by Lisa Su, operates in the same sector as Nvidia, but the current condition of its business cannot have any significant impact on the competitor’s market position. At the same time, it is worth noting that a persistent path to the goal, focused on a long-term distance, at some point can generate a large-scale result, although not in the foreseeable future.
The present Nvidia’s dominance is fueled by offering chips, networking, servers, software, and services. A kind of strategic feature of these products lies in their striving to provide technical conditions for the active use of artificial intelligence in the economic space. AMD, under the leadership of Lisa Su, is seeking for the same goals.
At the end of last week, the value of shares of the leader among Nvidia’s competitors rose by less than 1% in trading in New York. It is expected that this indicator will not show significant changes in the current year. At the same time, AMD’s market capitalization has shown significant growth in recent years, reaching $240 billion. This indicator is more than twice the size of the similar figure Intel Corp.
AMD expects the server maker to contribute to the company’s financial performance by the end of next year.
As we have reported earlier, AMD Posts Revenue Rise.
