AMD has agreed to buy artificial intelligence infrastructure group ZT Systems in a $4.9 billion cash and stock transaction, extending a run of AI investments by the chip company as it seeks to challenge market-leader Nvidia.
The California-based group said the acquisition would help accelerate the adoption of its Instinct line of AI data center chips, which compete with Nvidia’s popular graphics processing units (GPUs).
ZT Systems, a private company founded three decades ago, builds custom computing infrastructure for the biggest AI “hyperscalers.” While the company does not disclose its customers, the hyperscalers include the likes of Microsoft, Meta, and Amazon.
The deal marks AMD’s biggest acquisition since it bought Xilinx for $35 billion in 2022.
“It brings a thousand world-class design engineers into our team, it allows us to develop silicon and systems in parallel and, most importantly, get the newest AI infrastructure up and running in data centers as fast as possible,” AMD’s chief executive, Lisa Su, told the Financial Times.
“It really helps us deploy our technology much faster because this is what our customers are telling us [they need],” Su added.
The transaction is expected to close in the first half of 2025, subject to regulatory approval, after which New Jersey-based ZT Systems will be folded into AMD’s data center business group. The $4.9bn valuation includes up to $400mn contingent on “certain post-closing milestones.”
Citi and Latham & Watkins are advising AMD, while ZT Systems has retained Goldman Sachs and Paul, Weiss.
The move comes as AMD seeks to break Nvidia’s stranglehold on the AI data center chip market, which earlier this year saw Nvidia temporarily become the world’s most valuable company as big tech companies pour billions of dollars into its chips to train and deploy powerful new AI models.
