Advanced Micro Devices is buying a server company but has no plans to get into the server business. In the booming market for artificial-intelligence systems, that actually makes sense. The chip maker better known as AMD unveiled plans Monday to spend $4.9 billion to acquire ZT Systems, a privately held company that designs and manufactures servers and other types of data-center hardware.
It will be AMD’s second largest deal ever following the $35 billion takeover of programmable chip designer Xilinx announced in 2020. That deal brought AMD a business generating more than $3.6 billion a year in revenue. ZT Systems had revenue of more than $10 billion over the last 12 months.
But AMD won’t be keeping most of it; the company said Monday that it plans to seek a buyer for ZT’s manufacturing business once the deal closes. AMD instead will be getting about 1,000 “world-class design engineers with deep expertise in motherboard, power, thermal, networking and rack design," Chief Executive Officer Lisa Su said on a conference call Monday morning. It is a $5 billion acqui-hire, in other words—and one that Wall Street tentatively approves of.
AMD’s stock was 2.5% higher Monday afternoon even as many other chip stocks slipped into the red. AMD has a fast-growing business selling GPU accelerator chips used to power generative AI applications in data centers, but it is still a bit player in this market next to Nvidia. Part of the latter’s dominance can be chalked up to its ability to go beyond just chips to design full AI systems that can be easily plugged into existing data-center racks.
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