(Reuters) — Advanced Micro Devices Inc. has announced the acquisition of server manufacturer ZT Systems in a deal valued at $4.9 billion, combining forces to challenge Nvidia Corp in the data center technology space.
Headquartered in Secaucus, New Jersey, ZT Systems will be integrated into AMD’s Data Center Solutions Business Group. The acquisition includes a $400 million contingent payment based on certain milestones and will see AMD retaining the design and customer teams while divesting the manufacturing division.
Investors reacted positively to the news, driving AMD’s shares up by 3.5% in New York. The transaction will be a combination of 75% cash and 25% AMD common stock.
ZT Systems specializes in manufacturing server computers for large data centers, catering to the growing demand for artificial intelligence capabilities.
“AI is a game-changer and our top strategic focus,” said Lisa Su, CEO of AMD. The acquisition of ZT Systems will enable AMD to accelerate the deployment of its AI infrastructure for its key customers.
AMD is aiming to compete with Nvidia in the data center market, enhancing its software and hardware offerings to align with Nvidia’s portfolio and drive chip adoption.
The company has made significant investments in AI, including the recent acquisition of Silo AI for $665 million. With ZT Systems’ annual sales of $10 billion, AMD plans to focus on engineering capabilities rather than manufacturing after the deal closes in the first half of next year.
AMD is positioning itself as Nvidia’s primary competitor in AI processors, projecting over $4.5 billion in revenue from its MI accelerator chips this year. The company’s growth strategy under Su’s leadership aims to match Nvidia’s broad reach in the AI sector.
As part of the acquisition, AMD is seeking a strategic partner to acquire ZT’s US-based data center infrastructure manufacturing business, expected to be finalized in the first half of 2025.
“ZT’s manufacturing business presents a valuable asset for potential buyers with its substantial scale and presence in the US and Europe,” Su added.
(This story has been refiled to correct the source to Reuters)