AMD Acquires ZT Systems for $4.9 Billion to Boost AI Chip Market Share

In a strategic move to enhance its position in the artificial intelligence (AI) chip market, Advanced Micro Devices (AMD) has announced its acquisition of ZT Systems for approximately $4.9 billion. The Santa Clara-based semiconductor company aims to expand its portfolio of data center equipment and compete more effectively against rival Nvidia, a leader in graphics processing units (GPUs) essential for AI applications. AMD plans to finance the acquisition with 75% cash and the remainder in stock. The acquisition is driven by the increasing demand for GPUs, which are crucial for processing large data sets in parallel. AMD CEO Lisa Su emphasized that AI systems represent the company's top strategic priority. By integrating ZT Systems' engineering expertise, AMD intends to accelerate the development and deployment of its AI GPUs, catering to the needs of major cloud computing players like Microsoft. The deal will also allow AMD to streamline its server manufacturing operations, as it plans to divest this segment post-acquisition. ZT Systems, which currently generates around $10 billion in annual revenue, employs approximately 2,500 people, of whom AMD plans to retain about 1,000 engineers. The acquisition aligns with AMD's goal to enhance its capabilities in building server systems that can efficiently manage the extensive chip clusters required for AI workloads. As the competition in the AI hardware market intensifies, AMD's strategic acquisition positions it to better serve its existing customers, including tech giants like Microsoft and Meta Platforms.