AMD to acquire server maker ZT Systems | Wilnesh News

AMD The company said on Monday it plans to acquire server maker ZT Systems for $4.9 billion as it seeks to expand and compete in its portfolio of artificial intelligence chips and hardware. NVIDIA.

AMD plans to acquire 75% of ZT Systems’ shares in cash and the remaining shares in stock. As of the second quarter, the company had $5.34 billion in cash and short-term investments.

The computing requirements of artificial intelligence dictate that technology companies string together thousands of chips to achieve the necessary data processing capabilities. Connecting a large number of chips together means that the composition of the entire server system becomes increasingly important, which is why AMD acquired ZT Systems.

“Artificial intelligence systems are our top strategic priority,” AMD CEO Lisa Su told Reuters in an interview.

Su said that the addition of ZT Systems engineers will enable AMD to test and launch its latest AI graphics processing units (GPUs) faster to meet the needs of cloud computing giants such as Microsoft.

“The main way (ZT Systems) brings added value to the company is that we sell more GPUs,” Su said.

AMD plans to spin off its server manufacturing business and sell it once the deal closes as it has no plans to compete with other companies super microcomputerSu said.

AMD has not yet held talks with potential buyers.

ZT Systems CEO Frank Zhang will join AMD and report to Forrest Norrod, head of AMD data centers.

Closely held ZT Systems has about 2,500 employees, of which AMD plans to retain about 1,000 engineers. Su said ZT Systems currently has annual revenue of about $10 billion.

Executives expect the deal to close in the first half of 2025 and expect it will take another 12 to 18 months to sell the manufacturing business.

Nvidia CEO Jensen Huang said at the company’s developer conference in March that the former chip designer now creates and sells entire data centers, or the single components needed to build them. Analysts expect the company’s data center business, which includes chips and other artificial intelligence hardware, to generate $105.9 billion in revenue this year. Su said last month that the company expected revenue from AI chips to be about $4.5 billion this year. The company’s customers include Microsoft and Meta Platforms.

AMD expects ZT Systems to contribute to the company’s adjusted financial performance by the end of 2025.