AMD aims to catch up to Nvidia in AI battle with $4.9B acquisition — chipmaker strengthens AI ecosystem with ZT Systems’ expertise in server design | Tom’s Hardware

AMD has agreed to pay $4.9 billion to acquire ZT Systems, which designs and manufactures equipment for artificial intelligence (AI) and cloud computing data centers. The deal is one of AMD’s biggest acquisitions and aligns with the chipmaker’s plans to reduce Nvidia’s dominant position in AI.

ZT Systems was founded in New Jersey in 1994. It designs and manufactures servers, server racks, and other important infrastructure for data centers. ZT Systems is one of the leading providers of AI and general-purpose compute infrastructure for hyperscale providers.

According to AMD chief executive Lisa Su, ZT Systems has more than $10 billion in annual sales. That’s almost half of AMD’s $22.7 billion revenue in 2023. Su believes the acquisition will improve upon “the investments [AMD has] made to accelerate [its] AI hardware and software roadmaps.”

Once the deal closes, ZT Systems CEO Frank Zhang will join AMD’s Data Center Solutions Business Group. Zhang will lead the manufacturing business, while ZT president Doug Huang will head up the design and customer enablement teams. Both will report to AMD executive vice president and general manager Forrest Norris.

AMD won’t keep the manufacturing side of ZT Systems, though. The plan is to sell the manufacturing capability to “a strategic partner” and use ZT Systems to propel AMD’s ability to custom-design AI training clusters and data centers. Su sees that as the main value ZT Systems can provide to AMD.

Su called the acquisition “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.”

This is the latest in a series of investments AMD has made to strengthen its AI capabilities. The company has increased its organic research and development activities and invested more than $1 billion to expand its AI ecosystem and improve its AI software capabilities.

The deal is expected to close by the first half of 2025, assuming there aren’t any regulatory hurdles or closing conditions to overcome. If all goes well, the acquisition should increase AMD’s revenue by the end of 2025.