AMD announced on Monday that it will pay $4.9 billion to acquire ZT Systems, a manufacturer of servers, in an effort to take on Nvidia and diversify its line of artificial intelligence chips and systems.
AMD intends to use cash to cover 75% of the ZT Systems acquisition and shares for the remaining amount.
As of the second quarter, the company’s cash and short-term investments totaled $5.34 billion.
Tech companies have to connect thousands of chips in clusters to get the required processing power for AI, because to the computing requirements.
AMD is purchasing ZT Systems because the integration of large numbers of chips has made the composition of entire server systems more crucial.
In premarket trading, AMD’s stock increased by almost 3%.
In an interview, AMD CEO Lisa Su stated, “AI systems are our number one strategic priority.”
According to Su, the hiring of ZT Systems experts will enable AMD to test and release its newest AI GPU at the pace of cloud computing behemoths like Microsoft require.
“The main way (ZT Systems) is additive to the company is we sell more GPUs,” Su explained.
As it has no intention of competing with businesses like Super Micro Computer, AMD intends to separate and sell its server manufacturing division when the purchase closes.
AMD has not yet had discussions with any possible purchasers.
Frank Zhang, the CEO of ZT Systems, is joining AMD and will answer to Forrest Norrod, the company’s head of data centres.
AMD intends to keep about 1,000 of the roughly 2,500 employees of the privately held ZT Systems.
Laptops 1000According to Su, ZT Systems currently brings in about $10 billion a year in sales.
Executives anticipate that the acquisition will close in the first half of 2025, and the sale of the manufacturing company will take an extra 12 to 18 months.
At the company’s developer conference in March, Nvidia CEO Jensen Huang revealed that the once-only chip designer now designs and sells complete data centres or the individual parts required to assemble one.
Analysts predict that the company’s data centre sector, which sells chips and other AI technology, will bring in $105.9 billion this year.
