By Max A. Cherney
(Reuters) -AMD on Monday mentioned it plans to accumulate server maker ZT Programs for $4.9 billion as the corporate seeks to develop its portfolio of synthetic intelligence chips and {hardware} and battle Nvidia (NASDAQ:).
AMD (NASDAQ:) plans to pay for 75% of the ZT Programs acquisition with money and the rest in inventory. The corporate had $5.34 billion in money and short-term investments as of the second quarter.
The computing necessities for AI have dictated that tech corporations string collectively 1000’s of chips in clusters to attain the mandatory quantity of knowledge crunching horsepower. Stringing collectively the huge numbers of chips has meant the make-up of entire server techniques has develop into more and more vital, which is why AMD is buying ZT Programs.
AMD’s shares climbed practically 3% in premarket buying and selling.
“AI systems are our number one strategic priority,” AMD CEO Lisa Su mentioned in an interview with Reuters.
The addition of ZT Programs engineers will permit AMD to extra shortly take a look at and roll out its newest AI graphics processing items (GPUs) on the scale cloud computing giants corresponding to Microsoft (NASDAQ:) require, Su mentioned.
“The main way (ZT Systems) is additive to the company is we sell more GPUs,” Su mentioned.
AMD plans to interrupt off its server manufacturing enterprise and promote it as soon as the deal closes, because it has no plans to compete with corporations corresponding to Tremendous Micro Laptop (NASDAQ:), Su mentioned.
AMD has not but held talks with potential consumers.
ZT Programs Chief Govt Frank Zhang will be part of AMD and report back to AMD’s information heart chief, Forrest Norrod.
The carefully held ZT Programs has roughly 2,500 staff of which AMD plans to retain about 1,000 engineers. At the moment ZT Programs generates annual income of roughly $10 billion, Su mentioned.
Executives count on the deal to shut within the first half of 2025 and count on a further 12 to 18 months to promote the manufacturing enterprise.
Nvidia CEO Jensen Huang mentioned on the firm’s developer convention in March that the one-time chip designer now creates and sells complete information facilities, or the person parts wanted to construct one. This yr analysts count on the corporate to generate $105.9 billion from its information heart phase, which incorporates chips and different AI {hardware}.
Su mentioned final month the corporate expects to gather roughly $4.5 billion price of AI chip income this yr. The corporate’s prospects embrace Microsoft and Meta Platforms (NASDAQ:).
AMD expects ZT Programs to contribute to the corporate’s adjusted monetary efficiency by the tip of 2025.
