AMD to Acquire ZT Systems to Boost Data Center Capabilities and Challenge Nvidia

In a bold move to strengthen its position in the data center market,
AMD has announced plans to acquire server manufacturer ZT Systems
in a deal valued at approximately $4.9 billion, comprising a mix of cash and stock.

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Fierce Competition

Challenges in Competing

Future Strategy

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This acquisition is part of AMD’s strategy to enhance its technologies and increase its ability to compete with Nvidia, the market leader in this space.

ZT Systems, based in Secaucus, New Jersey, will become part of AMD’s Data Center Solutions Group, according to a statement released on Monday. AMD plans to retain ZT Systems’ design and customer service teams while looking to sell off the manufacturing division as part of its focus on data center technologies. Additionally, the deal includes a contingent payment of $400 million, which will be tied to the achievement of specific milestones.

Fierce Competition

AMD’s stock saw a 1.6% rise in New York on Monday, closing at $150.94 per share. The deal specifies that 75% of the purchase will be paid in cash, with the remaining 25% covered through AMD common stock.

This acquisition is particularly significant given the global shift towards artificial intelligence, which has become one of the most transformative technologies in recent years. ZT Systems has extensive experience in manufacturing servers for large-scale data centers, a customer segment that is heavily investing in new AI capabilities.

AMD CEO Lisa Su emphasized that AI is the company’s top strategic priority, and acquiring ZT Systems will enable AMD’s largest customers to deploy AI infrastructure more quickly and efficiently. She also highlighted that ZT Systems’ engineers have deep expertise in designing and managing high-performance, high-density systems, which will further strengthen AMD’s position in this rapidly growing market.

Challenges in Competing

As the second-largest provider of graphics processors, AMD is making significant efforts to compete with Nvidia,
which currently dominates the data center market for AI computing. Over the past year,
AMD has spent over a billion dollars to expand its presence in this market,
including the acquisition of Silo AI for $665 million to bolster its AI model development capabilities.

While AMD is making notable strides, Nvidia remains far ahead,
with analysts predicting that Nvidia will generate $100 billion in data center revenue this fiscal year.
However, AMD hopes to close the gap by expanding its product offerings and strengthening its foothold in the data center market.

Future Strategy

AMD is also seeking a strategic partner to acquire ZT Systems’ data center infrastructure manufacturing business,
a move expected to take place after the ZT Systems acquisition is finalized in the first half of 2025.
According to AMD CFO Jean Hu, the manufacturing division generated over $10 billion in revenue in the past 12 months,
making it a highly attractive asset for potential buyers in the industry.

These moves are part of AMD’s broader strategy to expand its presence in the data center market.
The company has achieved significant gains in recent years,
driving its market value to over $240 billion—more than double that of its long-time rival Intel.
Under the leadership of Lisa Su, AMD is committed to keeping pace with the rapid advancements
in this field and continuing to challenge Nvidia across all fronts.

AMD to Acquire ZT Systems

AMD to Acquire ZT Systems

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