Continuing to spend money to catch up with NVIDIA! AMD splashes out $4.9 billion to acquire the leading AI server manufacturer ZT Systems

According to the financial news, AMD (AMD.US) has agreed to acquire server manufacturer ZT Systems for $4.9 billion in cash and stock. In a statement released on Monday, ZT Systems, based in New Jersey, USA, will become part of AMD's Data Center Solutions Business Group. AMD will retain the design and customer teams of this business and seek to sell the manufacturing division. The transaction price includes $400 million based on certain milestones. AMD expects that by the end of 2025, this deal will add value on a non-GAAP revenue basis.

AMD emphasizes ZT Systems' rich experience in designing and optimizing cloud computing solutions. This acquisition will also help cloud and enterprise customers significantly accelerate large-scale deployments of AI infrastructure supported by AMD, enabling AMD to provide leading AI training and inference solutions based on cross-chip, software, and system innovations.

ZT Systems has over 15 years of experience in designing and deploying data center AI computing and storage infrastructure for the world's largest cloud companies. Its design, integration, manufacturing, and deployment capabilities make it one of the leading providers of AI training and inference infrastructure. It is worth noting that NVIDIA has been a customer of ZT Systems, which has provided AI services for the GB200 GPU product, establishing a relationship between the two companies.

ZT Systems has extensive experience in manufacturing server computers for owners of large data centers, as data center operators are investing billions in new artificial intelligence capabilities. AMD's acquisition of ZT Systems will enhance its data center technology and strengthen its ability to challenge NVIDIA. AMD CEO Lisa Su stated in the announcement that this acquisition will "significantly strengthen our data center AI systems." Following the news, AMD's stock price rose 2.5% in pre-market trading on Monday.

AMD is the second-largest graphics processor supplier, and graphics processors are crucial for developing AI software. AMD emphasizes that the acquisition of ZT Systems is the latest in a series of investments the company has made to significantly enhance its AI capabilities. In the past 12 months, in addition to increasing organic R&D activities, AMD has invested over $1 billion to expand the AMD AI ecosystem and enhance the company's AI software capabilities. AMD recently announced the completion of the acquisition of Silo AI, the largest private AI lab in Europe, for approximately $665 million in an all-cash deal.

AMD is considered NVIDIA's closest competitor in the field of AI processors. The company expects its new MI series accelerator chips to bring in over $4.5 billion in new revenue this year. This puts it ahead of all other competitors except NVIDIA, but still significantly behind. Analysts predict that NVIDIA's data center revenue for this fiscal year will reach $100 billion NVIDIA's expansion is benefiting from providing chips, networks, servers, software, and services, all aimed at enabling wider applications of artificial intelligence in the economy. Under the leadership of Su Zifeng, AMD is committed to achieving this goal.

AMD's stock rose by less than 1% last Friday, leaving the stock price almost unchanged in 2024. However, recent growth has pushed its market value to $240 billion, more than twice that of its long-time competitor Intel (INTC.US)