AMD has acquired an AI infrastructure firm ZT Systems, in a transaction reportedly worth around $4.9 billion. The deal comes as AMD seeks to consolidate its position on the market and fend off competition.
With this AI infrastructure move, AMD is also expected to exert more pressure on peers, and chip-maker Nvidia in the industry. AMD competes with Nvidia for AI accelerators. According to Market Watch, the group’s share price responded positively on the stock market adding 2% in Monday morning trading.
AMD to leverage ZT Systems’ expertise
According to the company, this deal aligns with its broader AI strategy. It therefore becomes a major step in AMD’s AI strategy, which seeks to consolidate its position as a leader in “AI training and inferencing solutions based on innovating across silicon, software and systems.”
Commenting on the deal, Mizuho desk-based analysts Jordan Klein said the deal “validates [Nvidia’s] integrated strategy of self-contained full-rack system hardware designs.”
In addition, the deal could make investors “a wee bit more confident” about the tech firm’s ability to hit Wall Street’s projection of $9 billion to $10 billion in AI graphics-processing-unit revenue for 2025.
According to Market Watch, the deal will be implemented through a mix of cash and stock. The company plans to pay 75% in cash and the remainder in stock, according to Reuters. AMD expects that it will be accretive to adjusted earnings per share by the end of next year.
Implementation of this transaction will enable AMD to leverage ZT Systems’ expertise in both design and optimization of cloud computing offerings.
Very excited to announce we have signed an agreement to acquire leading hyperscale solutions provider @ZTSystems. Next major step in our AI strategy combining our silicon, software and ZT’s world class systems expertise to enable rapid deployment of @AMD AI solutions at scale for… pic.twitter.com/jgla2cWDdV
— Lisa Su (@LisaSu) August 19, 2024
AMD scales its offerings with more acquisitions
AMD chief executive Lisa Su said that the acquisition of the New Jersey-based company “will enable AMD to deliver end-to-end data center AI infrastructure at scale.” “AI systems are our number one strategic priority,” Su told Reuters in an interview.
According to Reuters, the addition of ZT Systems engineers will allow AMD to quickly test and roll-out its latest GPUs at a scale that cloud computing giants like Microsoft require.
“The main way (ZT Systems) is additive to the company is we sell more GPUs.”
– Su.
The transaction come at a time when the AI industry is pouring money into enhancing its operations as competition heats up.
To stay relevant and keep up pace with the developments in the industry, businesses are constantly innovating new products and services, while others consolidate their position through strategic acquisitions.
The AMD deal announcement comes barely two months after the company disclosed its plans to acquire Silo AI, a Finland-based company valued at $665 million, which specializes in enabling businesses to integrate AI into their products.
The firm also revealed that it has invested over a billion dollars in the past year to boost its AI software functionality. This is in addition to the firm’s internal research and development efforts.