Silicon vendor AMD has announced a strategic move that will significantly expand the capabilities of AI systems in the data center. Acquisition He is CEO of ZT Systems, a leading provider of AI infrastructure for hyperscale computing enterprises.
The deal, valued at a whopping $4.9 billion, is a major step in AMD’s long-term AI strategy and is intended to enable the company to compete more effectively in the rapidly growing data center AI market.
The acquisition, announced Monday (Aug. 19), combines AMD’s high-performance Instinct AI accelerators, EPYC CPUs and networking products with ZT Systems’ data center design and deployment experience. AI Computing Large-scale storage infrastructure.
Once the transaction closes, ZT Systems will be integrated into AMD’s Data Center Solutions Business Group.
“ZT brings world-class system design and rack-scale solution expertise that will significantly enhance our data center AI systems and customer enablement capabilities,” AMD chairman and CEO Dr. Lisa Su said in a statement this week.
With all eyes on the rapidly evolving semiconductor market, we spoke with analysts about what the acquisition means for the data centers that are powering the AI boom.
“Competition like never before”
Industry experts say the acquisition will not only make AMD a stronger competitor to Nvidia, but also further widen the gap with rival Intel. I struggled financially.
“Incumbent data center CPU vendors Intel and AMD are We are facing more competition than ever before as major cloud service providers develop and deploy their own Arm-based CPUs,” said Vladimir Galabov, research director for cloud and data center at Omdia. Data Center Knowledge.
Galabov noted that computing is increasingly being performed outside the CPU. Servers configured with many coprocessors are being used at scale for efficient security, media and AI applications, but this is just the beginning. Facing these challenges, he added, Intel is becoming a foundry looking to manufacture processors designed by others.
“With the acquisition of ZT Systems, AMD is sending a clear signal that it is not giving up but rather will develop vertically integrated solutions like Nvidia,” Galabov said.
Santa Clara-based AMD acquires ZT Systems for $4.9 billion
Galabov said what’s often overlooked is that Nvidia’s advantage doesn’t just come from its GPUs, but that it also develops an industry-leading networking and software stack.
“The addition of ZT Systems gives AMD the ability to develop rack-scale and even cluster-scale designs in-house,” Galabov said. “Don’t be surprised if AMD acquires a software company next.”
Paul Schell, an industry analyst at global technology intelligence firm ABI Research, also sees AMD’s acquisition as an attack on Nvidia. In his view, the AI chip vendor is trying to catch up with market leader Nvidia, whose advantages range from individual chip performance to overall system-level designs made up of interconnected servers, racks and clusters.
“The next generation of large-scale AI models will require solutions optimized from individual pieces of silicon to entire domain-specific data centers, and ZT’s systems design heritage is key to delivering the next generation of AI models at scale,” said Dr. HyperscalerShell said. Data Center Knowledge.
“Together with the rest of AMD’s AI datacenter portfolio, this acquisition could provide a more comprehensive offering and strengthen the company’s datacenter-scale services.”
Challenges for AMD’s acquisition of ZT Systems
Ben Bajarin, CEO and principal analyst at Creative Strategies, has some concerns about AMD’s acquisition of ZT Systems.
The main question is whether the deal will enable AMD to become a bigger player in overall data center buildout, as ZT Systems now also partners with Intel and others.
“AMD has said they’re going to sell a broad range of businesses that are not related to AMD, so I don’t know how that will work, whether that’s a divestiture or some other way around,” Bajarin said. Data Center Knowledge“However, if AMD’s ZT Systems continues to build systems for Intel, Nvidia and others, antitrust issues could arise.”
In his view, the acquisition is essentially about AMD designing its own custom verticals around its own systems. He added that the purpose is to help AMD grow its data center business, which he broadly expects AMD to grow anyway.
“It helps to get them involved in the rack design stage. [and] “The cooling… level is targeted to benefit only AMD and no other companies,” he said.
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Futurum Group CEO Daniel Newman sees the acquisition of ZT Systems as another important step in AMD’s overall growth strategy.
Newman said. Data Center Knowledge AMD has been aggressively investing in software and consulting services companies over the past year, aiming to rapidly grow the AI chip (GPU, XPU) market into a $400 billion market by the end of 2027.
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“AMD is the undisputed No. 2 in data center AI GPUs, with its already growing $4.5 billion annual Instinct portfolio,” Newman said.
“But many investors, and perhaps AMD insiders, see the opportunity as significantly larger, given strong capital spending demand for AI chips and interest in significant competitors to match Nvidia’s strong competitive advantage and pricing power.”
