US semiconductor design company AMD is acquiring server manufacturer ZT Systems. This move is aimed at catching up with AI chip leader Nvidia.
On the 19th (local time), AMD announced that it will acquire ZT Systems for $4.9 billion (approximately 6.5 trillion KRW). 75% of the acquisition cost will be paid in cash, and the remaining 25% in stock. As of the second quarter, AMD holds $5.34 billion in cash.
ZT Systems, located in New Jersey, USA, is a privately held company that manufactures server computers for large-scale data center companies. Going forward, it will belong to AMD’s data center solution business group that equips AI chips, and will test the performance of AI chips developed by AMD. Lisa Su, AMD’s CEO, stated, "This acquisition will significantly strengthen data center AI systems," adding, "We will be able to test and launch the latest AI graphics processing units (GPUs) more quickly."
The acquisition process is expected to be completed in the first half of next year. CEO Su confirmed that AMD does not intend to compete with customers such as Dell Technologies and HP Enterprise, and plans to sell ZT Systems’ manufacturing division within 12 to 18 months after the acquisition. CNBC reported that there are currently no potential candidates for negotiation. However, about 1,000 engineers will remain.
This acquisition is analyzed as a decision targeting Nvidia, which dominates the global AI chip market. Wall Street analysts from Wells Fargo, Deutsche Bank, and others stated that this acquisition will enhance AMD’s server and AI data center capabilities and strengthen its competitiveness against Nvidia. AMD ranks second in the AI chip market after Nvidia and is considered the closest competitor. However, in terms of market share, the gap with Nvidia, which holds a dominant share of over 80%, remains large. Previously, AMD’s acquisition of Finnish startup Silo AI last month was also seen as part of its effort to bulk up in pursuit of Nvidia.
On this day, AMD’s stock price closed up more than 4% on the New York Stock Exchange following the news of the ZT Systems acquisition.
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