AMD has announced a significant move in its quest to strengthen its artificial intelligence (AI) capabilities by acquiring server maker ZT Systems in a cash-and-stock deal valued at $4.9 billion. The acquisition is part of AMD's broader strategy to compete more effectively with industry leader Nvidia, whose chips are in high demand for powering AI applications.
ZT Systems, a privately held company based in Secaucus, New Jersey, has been a key player in designing and deploying data center and storage infrastructure for cloud companies for over a decade. Following the acquisition, AMD plans to integrate ZT Systems into its Data Center Solutions Business Group but will seek to sell ZT Systems' server manufacturing business post-closure.
The deal, which includes a contingent payment of up to $400 million based on specific post-closing milestones, is expected to close in the first half of next year. AMD has been heavily investing in AI, with over $1 billion spent in the past year to expand its AI ecosystem and enhance its AI software capabilities.
As the tech industry faces increased scrutiny from the Biden Administration regarding mergers and acquisitions, AMD's strategic acquisition of ZT Systems highlights the company's determination to fortify its position in the AI market. The acquisition was approved by AMD's board and has already positively impacted the company's stock, with shares rising over 3% in pre-market trading.
This move underscores AMD's commitment to growing its AI footprint as it continues to challenge Nvidia's dominance in the sector.
