New York, August 23, 2023 – AMD, a leading provider of high-performance computing and graphics solutions, has announced its intention to acquire server manufacturer ZT Systems in a deal valued at $4.9 billion. The acquisition is aimed at bolstering AMD’s presence in the data center technology sector and challenging industry giant Nvidia.
Under the terms of the agreement, AMD will acquire ZT Systems in a transaction consisting of 75% cash and 25% stock. ZT Systems, which has reported revenues exceeding $10 billion over the past 12 months, will become a part of AMD’s Data Center Solutions business group.
AMD’s CEO, Su Zhi Feng, emphasized the strategic importance of the acquisition, stating that AI is the most transformative technology of the past 50 years and a top priority for the company. The acquisition of ZT Systems will enable our largest customers to deploy our AI infrastructure more rapidly, she said.
The deal is expected to significantly enhance AMD’s capabilities in data center technology, especially in the realm of AI systems. AMD’s past 12 months have seen a strong growth in its gross margin, which stood at 51.2%. This figure is more than double that of Dell and Supermicro during the same period, partly due to the robust growth of AI systems.
However, AMD will not retain the manufacturing division of ZT Systems. Instead, it plans to keep the design and customer teams, selling off the manufacturing part of the business. This decision is driven by three main considerations:
- To avoid potential conflicts of interest when competing with server manufacturers like Dell and Supermicro.
- To ensure that the overall gross margin of AMD remains unaffected.
- To focus on acquiring top talent in the industry.
The acquisition of ZT Systems is part of AMD’s broader strategy to increase its market presence in the AI sector. Over the past 12 months, AMD has invested over $1 billion to expand its influence in this market. In July this year, AMD also agreed to acquire AI model manufacturer Silo AI for $665 million.
The new MI series accelerator chips from AMD are expected to bring in over $4.5 billion in new revenue this year. Analysts predict that Nvidia will generate $100 billion in revenue from data centers this fiscal year, partly through the provision of chips, networking, servers, software, and services.
The acquisition of ZT Systems is expected to provide AMD with approximately 1,000 world-class design engineers who have deep expertise in motherboard, power supply, cooling, networking, and rack design. The addition of ZT Systems’ talent will help AMD expand its design capabilities beyond chips to other areas of the business.
This move is part of AMD’s strategy to better match its offerings with those of Nvidia, the leading graphics processor supplier. With this acquisition, AMD is clearly positioning itself as a major player in the data center technology sector, ready to challenge Nvidia’s dominance.
About AMD: AMD (Advanced Micro Devices, Inc.) is an American multinational semiconductor company that designs and produces microprocessors, graphics processors, and related technologies for consumer and business markets. The company is based in Santa Clara, California, and was founded in 1969.
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