AMD to Acquire Server Maker ZT Systems for $4.9 Billion in AI Push

Advanced Micro Devices (AMD) announced on Monday its plans to acquire server manufacturer ZT Systems for $4.9 billion. The strategic move is aimed at expanding AMD’s portfolio in artificial intelligence (AI) chips and hardware, intensifying its competition with industry giant Nvidia.

According to Reuters, AMD will finance 75% of the acquisition using cash, with the remaining portion paid in stock. As of the second quarter, the semiconductor company held $5.34 billion in cash and short-term investments. “AI systems are our number one strategic priority,” AMD CEO Lisa Su stated in an interview with Reuters.

The acquisition of ZT Systems is expected to significantly bolster AMD’s capabilities in AI technology. By integrating ZT Systems’ engineering talent, AMD plans to accelerate the testing and deployment of its latest AI graphics processing units (GPUs) at the scale required by cloud computing leaders like Microsoft, Su explained.

“The main way ZT Systems is additive to the company is we sell more GPUs,” Su said, highlighting the critical role that ZT Systems will play in expanding AMD’s market reach in the AI sector.

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The increasing computational demands of AI have driven technology companies to cluster thousands of chips together to achieve the necessary processing power. As a result, the configuration of entire server systems has become a key factor in performance, making AMD’s acquisition of ZT Systems a strategic move to enhance its offerings in this space.

Following the news, AMD’s shares saw an increase of more than 2%, while Nvidia’s shares rose by 1.4%.

Creative Strategies CEO Ben Bajarin commented on the deal, saying, “No doubt this gives them much stronger lock-in with their data center customers, and because of that, the acquisition is a net positive for their long-term revenue strategy.”