AMD acquires ZT Systems

AMD has taken a big step towards strengthening its AI infrastructure by purchasing ZT Systems, one of the providers of advanced artificial intelligence services, worth $4.9 billion. This move is AMD’s latest move to strengthen its position in the data center market.

In the past year, AMD has invested more than $1 billion in developing its AI ecosystem and software capabilities to improve its position in competition with NVIDIA, one of the companies active in the field of artificial intelligence that offers more comprehensive systems.

This transaction, which is expected to be completed in the first half of 2025, will be financed in the form of 75% cash and 25% equity. AMD expects the acquisition to be accretive to the company’s non-GAAP earnings by the end of next year. According to Jean Hu, AMD’s chief financial officer, the acquisition will help increase the company’s revenue through 2026.

ZT Systems is renowned for its expertise in designing and deploying large-scale infrastructure for data centers. The company’s systems are used by major cloud computing service providers, making ZT Systems a key player in the data center industry. The acquisition is in line with AMD’s strategy to expand its AI hardware and infrastructure, which is essential to meet the growing demand for AI applications and cloud computing.

AMD CEO Lisa Su highlighted the strategic importance of the acquisition, stating that ZT Systems’ capabilities can accelerate the large-scale deployment of AMD’s AI GPUs. “The combination of Instinct AI accelerators, EPYC processors and our portfolio of networking products with ZT Systems’ leading expertise in data center systems enables AMD to build data center AI infrastructure at scale, in collaboration with OEM partners and ODM itself, to offer.”

As part of the deal, AMD plans to divest ZT Systems’ manufacturing division and will seek a strategic partner to acquire the division. However, the acquisition will retain about 1,000 of ZT Systems’ 2,500 employees.

ZT Systems CEO Frank Zhang is joining AMD and will oversee the integration of the company’s design and customer enablement teams into AMD’s Data Center Solutions business group.

Shareholders reacted positively to this news and AMD stock price increased by 12.46% on Monday.