-advertisement-

AMD (AMD.O) announced on Monday (August 19) its plans to acquire server maker ZT Systems for $4.9 billion, aiming to strengthen its AI chip and hardware portfolio and compete with Nvidia (NVDA.O). The deal will be financed with 75% cash and the remainder in stock. AMD held $5.34 billion in cash and short-term investments as of Q2.

As AI computing demands increasingly require vast numbers of interconnected chips, AMD's acquisition of ZT Systems will enhance its ability to deliver AI GPUs at scale for cloud computing giants like Microsoft (MSFT.O). "AI systems are our top strategic priority," said AMD CEO Lisa Su.

AMD shares rose over 2%, while Nvidia's shares gained 1.4%. The acquisition is expected to boost AMD's data center business, with Creative Strategies CEO Ben Bajarin calling it a positive move for long-term revenue.

AMD plans to divest ZT Systems' server manufacturing business post-acquisition, focusing solely on GPUs and AI hardware, as it has no plans to compete with companies such as Super Micro Computer (SMCI.O). ZT Systems CEO Frank Zhang will join AMD, along with approximately 1,000 ZT Systems employees.

The acquisition, expected to close in the first half of 2025, is projected to be financially neutral by year-end and to accelerate AMD's revenue growth in 2026. The sale of the manufacturing business is not expected to impact AMD's long-term operations.

Su said last month the company expects to collect roughly $4.5 billion worth of AI chip revenue this year. The company's customers include Microsoft and Meta Platforms (META.O).

Editor：Lulu

▼▼▼

Chip company Inuitive laying off 20% of workforce as CEO retires

South Korean AI chip makers Rebellions and Sapeon agree to merge

Chipmaker Texas Instruments to receive up to $1.6 bln in funding from US

TSMC acquires Innolux's plant in southern Taiwan to expand advanced packaging capacity

Multiple Semiconductor Manufacturing Projects Delayed in the U.S.

Nanya Technology faces production halt and losses due to power outage