AMD is expanding its portfolio with the purchase announcement of ZT Systems, a server and cloud computing expert, at a deal value of $4.9 billion. This move is part of AMD’s broader strategy to enhance its capabilities in artificial intelligence.
ZT Systems, established in 1994, partners with semiconductor companies to develop and implement AI-focused computing and storage solutions within data centers at a large scale, serving major global cloud providers. Their offerings include servers tailored for storage, GPU/accelerators, high-performance computing, 5G, and edge computing.
AMD CEO Lisa Su commented, “The acquisition of ZT Systems marks a significant phase in our AI strategy, aimed at providing top-tier training and inferencing solutions for swift deployment across cloud and corporate users.”
The transaction is slated for completion in the first half of 2025, following which ZT Systems will integrate into AMD’s Data Center Solutions business group. ZT’s CEO Frank Zhang will manage the manufacturing division, whereas Doug Huang, the President, will oversee design and customer support teams.
So what can we take away from this? A few key things:
1) AMD is ramping up its acquisition pace. The protracted acquisition of Xilinx seemed to dampen the company’s enthusiasm for buyouts. After the deal closed in 2022, there wasn’t any major M&A activity until about a year ago. Since then, AMD has been on an AI-related buying spree. It purchased AI lab Silo last July, picked up open source AI developer Nod.AI in October 2023, and invested $135 million in an Irish R&D lab in June 2023. I expect to see more deals this year.
2) AI systems are becoming increasingly complex. What started out as just a PCI Express card plugged into a standard server has become much more intricate and complex to configure. Nvidia CEO Jensen Huang notes that the DGX systems Nvidia sells have tens of thousands of parts. Building and configuring them is difficult, and skills are rare. AMD now has these skills in-house. I wouldn’t be surprised to see Intel and Nvidia purchase small, boutique companies with expertise similar to ZT.
3) I expect AMD will announce its own DGX-like, fully integrated system – notably, AMD will have the advantage of using its own CPUs and won’t have to purchase them the way Nvidia does.
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