AMD To Acquire ZT Systems For $4.9 Bn In Strategic AI Expansion
AMD expects the acquisition to begin positively impacting its financial performance by the end of 2025
AMD plans to acquire server maker ZT Systems for USD 4.9 billion, which is a big step in its strategy to enhance its AI hardware portfolio and intensify competition with Nvidia in the booming artificial intelligence market.
The acquisition comes as tech companies face growing demands for computing power to support AI applications, which require vast clusters of interconnected chips. By acquiring ZT Systems, AMD will look to strengthen its ability to deliver advanced AI graphics processing units (GPUs) at the scale required by major cloud computing clients like Microsoft. In an interview with Reuters, AMD CEO Lisa Su said that AI systems are the company’s top priority, and the addition of ZT Systems' engineering talent will enable faster testing and deployment of AI solutions.
The deal will be funded with 75 per cent cash and 25 per cent stock and is set to close in the first half of 2025.
While ZT Systems generates around USD 10 billion in annual revenue, primarily from its manufacturing unit, AMD plans to divest this segment post-acquisition. AMD does not intend to compete in the server manufacturing space, focusing instead on leveraging ZT Systems’ capabilities to boost its AI hardware business. Around 1,000 ZT Systems employees will join AMD, contributing to an anticipated USD 150 million in annual operating expenses.
AMD expects the acquisition to begin positively impacting its financial performance by the end of 2025, with a projected break-even in the first year after closing. By 2026, the deal is expected to accelerate revenue growth, driven by increased GPU sales.
(Inputs from Reuters)
