AMD has declared its intention to purchase ZT Systems, a key player in AI infrastructure solutions catering to major hyperscale computing entities. This strategic move aligns with AMD’s aim to enhance AI training and inferencing solutions by making advancements in silicon, software, and system levels.
AMD has seen significant progress towards attracting datacenter enterprise and SMB users to their chips over the past few years. AMD first released their Opteron CPU in April 2003 to much fanfare as it represented a significant enhancement over Intel’s then best Xeon market leader, and as a result Opteron enjoyed a few years of market share growth going from 6% to 22% in the 18 months after Opteron’s release. That surge faded, however, as AMD failed to keep up with Intel’s advancements between 2006 and 2017. With the release of AMD’s Ryzen CPU in 2017, and more significantly with the latest two generations starting a few years ago, AMD’s popularity, especially among hosting companies has surged. In fact, LowEndBox recently published a category dedicated to VPS run on AMD Ryzen CPUs as demand among VPS and dedicated server consumers has surged the past few years. The high processing power offered by modern Ryzen CPUs has made them very attractive to hosting companies and their clients overall. As of early 2024 AMD’s market share in the datacenter compute industry has risen to 30% and continues to increase.
ZT Systems will contribute its deep expertise in cloud computing optimization to AMD, enhancing AMD’s capabilities in deploying AI infrastructure for cloud and enterprise clients on an expanded scale. AMD’s Chair and CEO, Dr. Lisa Su, highlighted that this acquisition is vital to the company’s long-term AI strategy, promoting swift implementation of superior training and inferencing solutions for a diverse client base.
Boasting over 15 years in the field, ZT Systems has been recognized as a top provider of data center AI compute and storage infrastructure, especially renowned among worldwide cloud corporations. Their success stems from their adeptness in design, integration, manufacturing, and deployment. Post-transaction, the company will integrate into AMD’s Data Center Solutions Business Group and will be based in Secaucus, New Jersey.
Following the acquisition, ZT Systems CEO Frank Zhang will manage the manufacturing sector, while President Doug Huang will head the design and customer support teams, reporting directly to AMD Executive Vice President and General Manager Forrest Norrod. Additionally, AMD intends to find a strategic ally to take over ZT Systems’ U.S.-based data center infrastructure manufacturing operations.
The transaction, valued at approximately $4.9 billion in cash and stock, includes a contingent payment of up to $400 million based on post-closing milestones. AMD anticipates that the acquisition will be accretive on a non-GAAP basis by the end of 2025. The deal has been unanimously approved by AMD’s Board of Directors and is expected to close in the first half of 2025, pending regulatory approvals and customary closing conditions.
This acquisition is part of a broader effort by AMD to strengthen its AI capabilities, following a series of investments totaling over $1 billion in the past year to expand its AI ecosystem and enhance its AI software.
Citi is serving as the exclusive financial advisor to AMD, with Latham & Watkins LLP as legal advisor. Goldman Sachs & Co. LLC is advising ZT Systems, with Paul, Weiss, LLP providing legal counsel.
Recently, AMD reported second-quarter 2024 revenue of $5.8 billion, with a gross margin of 49% and an operating income of $269 million. The company’s strong performance was driven by growth in its Data Center and Client segments, according to AMD EVP, CFO, and Treasurer Jean Hu.
Meanwhile, AMD’s stock has been on a multi year surge as the market reacts to its new position as an AI leader as it continues to take share away from struggling competitor Intel. Market reception to AMD’s plan to acquire ZT Systems have been generally muted to cautiously optimistic based on stock price performance in the days following the announcement.
As questions swirl around the future of Intel, its CEO Pat Gelsinger, and the company’s challenged AI strategy will the divergent path AMD is on continue to yield profits for investors and great products for consumers? Is the AI demand cycle overhyped? Are companies that are directly involved in supporting the AI mini revolution, such as AMD and Nvidia in a bubble?
Let us know what you think in the comments below.
Ready to shop for an AMD Ryzen powered VPS here at LowEndBox? Check out the options in the link below.
LowEndBox is a go-to resource for those seeking budget-friendly hosting solutions. This editorial focuses on syndicated news articles, delivering timely information and insights about web hosting, technology, and internet services that cater specifically to the LowEndBox community. With a wide range of topics covered, it serves as a comprehensive source of up-to-date content, helping users stay informed about the rapidly changing landscape of affordable hosting solutions.
Related Posts:
- Google is Building a Datacenter in…um, Where…?!? - September 4, 2024
- Vultr Partners with SQream to Enhance Data Analytics through GPU Acceleration and Improved Scalability - September 3, 2024
- DigitalOcean Enhances Security with New Role-Based Access Control Features - August 31, 2024
Leave a Reply