AMD to acquire server builder ZT systems a $4.9 Billion strategic move
AMD has announced intentions to acquire server manufacturer ZT Systems for $4.9 billion in cash and equity.
The deal is part of AMD’s aim to improve its capabilities in data center and AI systems, with a focus on competing with Nvidia in the AI hardware area. ZT Systems is a prominent participant in hyperscale server systems, and the acquisition will help AMD to strengthen its system design and engineering capabilities. However, AMD aims to divest ZT’s manufacturing operations to avoid competing with its own clients.
This acquisition is part of AMD’s overall aim to increase its presence in the AI infrastructure market, which is expected to grow quickly in the coming years. By combining ZT Systems’ expertise, AMD hopes to provide more competitive AI server solutions and threaten NVIDIA’s market share.
Industry observers believe that if this acquisition is done successfully, it might drive considerable revenue growth for AMD, particularly in its AI-focused product lines. Lisa Su, AMD’s CEO, has stated that this acquisition is an essential part of the company’s long-term ambition to become a leader in AI technology. Su stressed that AI is “the most transformational technology of the last 50 years” and that the ZT Systems acquisition is a critical step toward delivering AI solutions at scale.
The acquisition is also expected to dramatically improve AMD’s technical ability, since 1,000 engineers from ZT Systems will join AMD. This injection of talent is critical as AMD seeks to produce competitive AI servers and broaden its impact in the fast expanding AI business.
The transaction, which includes cash and equity, is slated to finalize in the first half of 2025. AMD intends to fund 75% of the acquisition with cash and the remaining with shares, leveraging its solid financial position, which includes more than $5 billion in cash reserves.
However, AMD is not going to maintain all of ZT Systems’ operations. Following the acquisition, the company wants to sell ZT’s manufacturing division and focus on system design. This move is consistent with AMD’s approach of avoiding direct competition with businesses such as Super Micro Computer, which are major participants in server production.
