AMD, a leading chipmaker in the AI sector, has announced a significant acquisition to bolster its role as a key partner in the AI ecosystem. The company is purchasing ZT Systems, a provider of compute design and infrastructure for AI, cloud, and general-purpose computing, for $4.9 billion. The deal, which is a combination of cash and stock, includes an additional contingent payment of up to $400 million if specific performance targets are met.
AMD’s primary goal with this acquisition is to integrate ZT Systems’ expertise in computing infrastructure design into its own operations. AMD plans to sell ZT Systems’ data center infrastructure manufacturing division to a “strategic partner,” while retaining and utilizing ZT Systems’ capabilities in AI systems design.
Founded in 1994 and based in New Jersey, ZT Systems has remained privately held, only raising external funding once — $850 million in debt in 2023. The company collaborates closely with major chipmakers like Nvidia and Intel, providing solutions across various sectors, including server storage, GPU/accelerators, high-performance computing, 5G, and edge computing.
Enhancing AMD’s AI Capazbilities
This acquisition is a strategic move by AMD to deepen its expertise in AI systems design, which includes not only silicon but also software and systems. This added expertise is expected to help AMD sell more of its chips and systems to customers, particularly as the demand for efficient AI model training and inferencing solutions grows.
AMD has already invested around $1 billion in expanding its broader ecosystem, and the acquisition of ZT Systems marks a significant step in this ongoing effort. As AI systems become increasingly complex, there is a critical need for tech companies to enhance the efficiency of their systems, especially in compute-intensive tasks.
Leadership and Future Outlook
Dr. Lisa Su, AMD’s chair and CEO, highlighted the strategic importance of this acquisition in AMD’s long-term AI strategy. She stated, “ZT adds world-class systems design and rack-scale solutions expertise that will significantly strengthen our data center AI systems and customer enablement capabilities.” Su also emphasized how the combination of AMD’s high-performance Instinct AI accelerator, EPYC CPU, and networking products with ZT Systems’ expertise would enable the delivery of end-to-end data center AI infrastructure at scale.
ZT Systems’ CEO, Frank Zhang, will lead AMD’s manufacturing business, while ZT president Doug Huang will head the design and customer enablement teams. Both executives will report to AMD’s executive vice president and general manager, Forrest Norrod. The integration of ZT Systems into AMD’s Data Center Solutions Business Group is expected to significantly enhance AMD’s role in designing the AI infrastructure that will shape the future of computing.
The acquisition is anticipated to be finalized in the first half of 2025, marking a pivotal moment in AMD’s ongoing expansion and solidification of its position in the AI and data center markets. ZT Systems’ established expertise in critical computing and storage infrastructure, particularly for large cloud companies, will play a key role in AMD’s future growth and strategy.
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