AMD’s ZT Systems acquisition primes it for a battle with Nvidia

Girding its loins for a widely-anticipated battle with Nvidia, AMD has acquired ZT Systems for $4.9 billion.

ZT Systems, which provides AI and general purpose compute infrastructure for major hyperscale providers, will, AMD hopes, help expand its AI chips and hardware business.

The cash and stock deal includes a contingent payment of up to $400 million based on certain milestones being hit after the deal has closed - expected to be in the first half of next year. ZT Systems' data center infrastructure manufacturing business will be split off and sold.

"ZT adds world-class systems design and rack-scale solutions expertise that will significantly strengthen our data center AI systems and customer enablement capabilities. This acquisition also builds on the investments we have made to accelerate our AI hardware and software roadmaps," said AMD chair and CEO Lisa Su.

"Combining our high-performance Instinct AI accelerator, EPYC CPU, and networking product portfolios with ZT Systems’ industry-leading data center systems expertise will enable AMD to deliver end-to-end data center AI infrastructure at scale with our ecosystem of OEM and ODM partners."

Once the deal closes, ZT Systems will join the AMD Data Center Solutions Business Group. Chief executive Frank Zhang will lead the manufacturing business while ZT president Doug Huang will front the design and customer enablement teams.

Both will report to AMD executive vice president and general manager Forrest Norrod.

"We are excited to join AMD and together play an even larger role designing the AI infrastructure that is defining the future of computing," Zhang said.

"For almost 30 years we have evolved our business to become a leading provider of critical computing and storage infrastructure for the world’s largest cloud companies. AMD shares our vision for the important role our technology and our people play designing and building the computing infrastructure powering the largest data centers in the world."

AMD has been on an acquisition spree

AMD is the only serious challenger to Nvidia's dominance in the chip market, and hopes that this new acquisition will help it catch up.

The deal marks the latest in a series of investments by AMD aimed at strengthening its AI capabilities. In the last 12 months, it's invested more than $1 billion to expand the AMD AI ecosystem and strengthen its AI software capabilities.

In April, the company announced new processors for AI-enabled laptops and desktops. Similarly, in July, it agreed to buy Silo AI for $665 million to boost its portfolio of end-to-end AI solutions.

While AMD still lags behind rival Nvidia, the move could be good for competition in the long run, according to Rodrigo Liang, CEO and co-founder at SambaNova Systems. Liang noted that the acquisition could improve enterprise choice.

"AMD's acquisition of ZT Systems recognizes the growing demand for alternative options to Nvidia’s AI platforms," he said.

"Enterprises don’t want to be locked into a single chip vendor, they want the choice to implement the best full stack AI systems that solve their AI challenges."