AMD on Monday stated it plans to amass server maker ZT Programs for $4.9 billion as the corporate seeks to broaden its portfolio of synthetic intelligence chips and {hardware} and battle Nvidia.
AMD plans to pay for 75% of the ZT Programs acquisition with money and the rest in inventory. The corporate had $5.34 billion in money and short-term investments as of the second quarter.
The computing necessities for AI have dictated that tech corporations string collectively hundreds of chips in clusters to attain the mandatory quantity of information crunching horsepower. Stringing collectively the huge numbers of chips has meant the make-up of complete server techniques has change into more and more necessary, which is why AMD is buying ZT Programs.
AMD’s shares climbed almost 3% in premarket buying and selling.
“AI techniques are our primary strategic precedence,” AMD CEO Lisa Su stated in an interview with Reuters.
The addition of ZT Programs engineers will permit AMD to extra rapidly check and roll out its newest AI graphics processing items (GPUs) on the scale cloud computing giants similar to Microsoft require, Su stated.
“The primary means (ZT Programs) is additive to the corporate is we promote extra GPUs,” Su stated.
AMD plans to interrupt off its server manufacturing enterprise and promote it as soon as the deal closes, because it has no plans to compete with corporations similar to Tremendous Micro Pc, Su stated.
AMD has not but held talks with potential patrons.
ZT Programs Chief Government Frank Zhang will be a part of AMD and report back to AMD’s knowledge heart chief, Forrest Norrod.
The intently held ZT Programs has roughly 2,500 staff of which AMD plans to retain about 1,000 engineers. At the moment ZT Programs generates annual income of roughly $10 billion, Su stated.
Executives anticipate the deal to shut within the first half of 2025 and anticipate a further 12 to 18 months to promote the manufacturing enterprise.
Nvidia CEO Jensen Huang stated on the firm’s developer convention in March that the one-time chip designer now creates and sells complete knowledge facilities, or the person parts wanted to construct one. This yr analysts anticipate the corporate to generate $105.9 billion from its knowledge heart section, which incorporates chips and different AI {hardware}.
Su stated final month the corporate expects to gather roughly $4.5 billion price of AI chip income this yr. The corporate’s prospects embody Microsoft and Meta Platforms.
AMD expects ZT Programs to contribute to the corporate’s adjusted monetary efficiency by the top of 2025.
© Thomson Reuters 2024
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