AMD (AMD) on Monday stated it plans to amass server maker ZT Methods for $4.9 billion as the corporate seeks to increase its portfolio of synthetic intelligence chips and {hardware} and battle Nvidia (NVDA).
AMD plans to pay for 75% of the ZT Methods 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 1000’s of chips in clusters to attain the required quantity of information crunching horsepower. Stringing collectively the huge numbers of chips has meant the make-up of entire server techniques has turn into more and more essential, which is why AMD is buying ZT Methods.
AMD’s shares climbed practically 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 Methods engineers will enable AMD to extra shortly take a look at and roll out its newest AI graphics processing models (GPUs) on the scale cloud computing giants reminiscent of Microsoft require, Su stated.
“The primary approach (ZT Methods) 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 reminiscent of Tremendous Micro Pc, Su stated.
AMD has not but held talks with potential patrons.
ZT Methods Chief Government Frank Zhang will be part of AMD and report back to AMD’s knowledge heart chief, Forrest Norrod.
The carefully held ZT Methods has roughly 2,500 staff of which AMD plans to retain about 1,000 engineers. At present ZT Methods generates annual income of roughly $10 billion, Su stated.
Executives count on the deal to shut within the first half of 2025 and count on 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 elements wanted to construct one. This 12 months analysts count on the corporate to generate $105.9 billion from its knowledge heart phase, which incorporates chips and different AI {hardware}.
Su stated final month the corporate expects to gather roughly $4.5 billion value of AI chip income this 12 months. The corporate’s clients embody Microsoft and Meta Platforms.
AMD expects ZT Methods to contribute to the corporate’s adjusted monetary efficiency by the tip of 2025.
(Reporting by Max A. Cherney in San Francisco; Modifying by Chris Reese)
