AMD’s $4.9 Billion Acquisition of ZT Systems Set to Challenge Nvidia’s Dominance

• AMD is acquiring AI infrastructure group ZT Systems in a deal that's worth $4.9 billion.
• The deal is supposed to be finalized by the first half of 2025, after which ZT's CEO, President, and around 1,000 engineers will join AMD.
• This acquisition is set to be a game-changer for AMD and a fresh challenge for Nvidia, who now has to worry about its biggest rival becoming stronger than before.

Advanced Micro Devices (AMD) will be acquiring artificial intelligence infrastructure group ZT Systems in a massive $4.9 billion deal. Out of this $4.9 billion, $400 million is subject to certain post-closing milestones."

The payment will be made in cash and stocks, and the transaction is expected to close within the first half of 2025 - provided there's no objection from the regulatory bodies. Once that's done, ZT Systems will officially become a part of AMD's data center business group.

Frank Zhang, CEO of ZT Systems, will join the AMD team and lead the manufacturing business, and ZT's President, Doug Huang, will take over the design and customer enablement teams. Both Zhang and Huang will report to AMD Executive Vice President and General Manager, Forrest Norrod.

In addition to these executives, around 1,000 design engineers are also expected to join the AMD team. It's also worth noting that AMD plans to shut down ZT System's hardware manufacturing unit to avoid competing with its own customers, which include Dell and SuperMicro.

This is AMD's largest acquisition since the 2022 acquisition of chipmaker Xilinx for $35 billion. Furthermore, as a result of this news, AMD's stocks have been up by 6.23% this week.

How Will ZT Systems Benefit AMD?

ZT Systems might not a massively popular name, but it has more than 15 years of experience in designing and deploying data center AI computing and storage infrastructure for some of the largest companies in the world.

Although it has never revealed any information about its clients, we can expect to see names as big as Microsoft, Amazon, and Meta.

One of the most immediate benefits of this acquisition is that ZT System's experience will help AMD accelerate the adoption of its Instinct line of AI data center chips.

In addition to that, it will also help AMD expand its existing product line, offer more comprehensive solutions to its users, and get the best infrastructure up and running in data centers as quickly as possible.

Our acquisition of ZT Systems is the next major step in our long-term AI strategy to deliver leadership training and inferencing solutions that can be rapidly deployed at scale across cloud and enterprise customers." - Dr. Lisa Su, AMD's Chair and CEO

How Will AMD-ZT Systems Collaboration Challenge Nvidia?

It's no secret that NVIDIA is the market leader when it comes to the chip industry, but AMD is one of its strongest rivals, and ZT Systems' acquisition just made it stronger.

For example, I mentioned earlier how teaming up with ZT systems will accelerate the adoption of its Instinct line of AI data center chips. Here, it's worth noting that these chips are in direct competition with Nvidia's popular graphics processing units (GPUs).

Also, Nvidia and AMD were, until this acquisition, mostly competing over chips. However, AMD will now be able to provide a complete and optimized AI infrastructure, meaning it can attract bigger clients who want to efficiently deploy AI at a larger scale.

Next, customers will appreciate a strong alternative (like AMD) in an industry that's too dominated by Nvidia. This will also prevent a monopoly in the market and ensure that companies do not have to depend on a single vendor, let alone be abused by it.

It's also worth noting that this is not the first move AMD has made to overtake Nvidia. Over the past year, it has invested more than $1 billion to expand its AI ecosystem and strengthen its software.

Everything seems to be going in favor of AMD so far, but the real test will be how well it maintains this acquisition and if it finally manages to snatch some market share from Nvidia.

Related: AMD's SinkClose' flaw affects almost every AMD CPU in existence - patches are being released

The post AMD's $4.9 Billion Acquisition of ZT Systems Set to Challenge Nvidia's Dominance appeared first on The Tech Report.