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AMD has agreed to purchase synthetic intelligence infrastructure group ZT Programs in a $4.9bn money and inventory transaction, extending a run of AI investments by the chip firm because it seeks to problem market chief Nvidia.
The California-based group mentioned the acquisition would assist speed up the adoption of its Intuition line of AI knowledge centre chips, which compete with Nvidia’s widespread graphics processing items (GPUs).
ZT Programs, a personal firm based three a long time in the past, builds customized computing infrastructure for the most important AI “hyperscalers”. Whereas the corporate doesn’t disclose its clients, the hyperscalers embody the likes of Microsoft, Meta and Amazon.
The deal marks AMD’s greatest acquisition because it purchased Xilinx for $35bn in 2022.
“It brings a thousand world-class design engineers into our workforce, it permits us to develop silicon and techniques in parallel and, most significantly, get the most recent AI infrastructure up and working in knowledge centres as quick as attainable,” AMD’s chief govt Lisa Su instructed the Monetary Occasions.
“It actually helps us deploy our expertise a lot sooner as a result of that is what our clients are telling us [they need],” Su added.
The transaction is anticipated to shut within the first half of 2025, topic to regulatory approval, after which New Jersey-based ZT Programs can be folded into AMD’s knowledge centre enterprise group. The $4.9bn valuation consists of as much as $400mn contingent on “sure post-closing milestones”.
Citi and Latham & Watkins are advising AMD, whereas ZT Programs has retained Goldman Sachs and Paul, Weiss.
The transfer comes as AMD seeks to interrupt Nvidia’s stranglehold on the AI knowledge centre chip market, which earlier this 12 months noticed Nvidia quickly turn out to be the world’s most precious firm as large tech firms pour billions of {dollars} into its chips to coach and deploy highly effective new AI fashions.
A part of Nvidia’s success stems from its “techniques” strategy to the AI chip market, providing end-to-end computing infrastructure that features pre-packaged server racks, networking gear and software program instruments to make it simpler for builders to construct AI purposes on its chips.
AMD’s acquisition exhibits the chipmaker constructing out its personal “techniques” providing. The corporate rolled out its MI300 line of AI chips final 12 months, and says it would launch its next-generation MI350 chip in 2025 to compete with Nvidia’s new Blackwell line of GPUs.
In Could, Microsoft was one of many first AI hyperscalers to undertake the MI300, constructing it into its Azure cloud platform to run AI fashions akin to OpenAI’s GPT-4. AMD’s quarterly income for the chips surpassed $1bn for the primary time within the three months to June 30.
However whereas AMD has feted the MI300 as its fastest-ever product ramp, its knowledge centre income nonetheless represented a fraction of the $22.6bn that Nvidia’s knowledge centre enterprise raked in for the quarter to the top of April.
In March, ZT Programs introduced a partnership with Nvidia to construct customized AI infrastructure utilizing its Blackwell chips. “I feel we actually consider ZT as a part of AMD will considerably speed up the adoption of AMD AI options,” Su mentioned, however “now we have buyer commitments and we’re actually going to honour these”.
Su added that she anticipated regulators’ evaluation of the deal to give attention to the US and Europe.
Along with rising its analysis and growth spending, AMD says it has invested greater than $1bn over the previous 12 months to increase its AI {hardware} and software program ecosystem.
In July the corporate introduced it was buying Finnish AI start-up Silo AI for $665mn, the most important acquisition of a privately held AI start-up in Europe in a decade.
