AMD has announced plans to acquire ZT Systems, a leading provider of AI infrastructure for hyperscale computing companies, in a deal valued at $4.9 billion. The acquisition, expected to close in the first half of 2025, aims to strengthen AMD’s position in the rapidly growing AI chip market.
The transaction includes $3.675 billion in cash and $1.225 billion in AMD stock, with an additional $400 million contingent on meeting certain post-closing milestones. AMD expects the acquisition to be accretive on a non-GAAP basis by the end of 2025.
ZT Systems brings extensive experience in designing and optimizing cloud computing solutions, particularly for AI applications. The company has been a key player in providing AI training and inference infrastructure for major cloud providers over the past 15 years.
AMD CEO Lisa Su emphasized the strategic importance of the acquisition, stating, “ZT adds world-class systems design and rack-scale solutions expertise that will significantly strengthen our data center AI systems and customer enablement capabilities.”
The move is an attempt to challenge NVIDIA’s dominant position in the AI chip market. NVIDIA has gained a significant advantage by offering end-to-end computing infrastructure, including pre-packaged server racks and networking equipment. AMD’s acquisition of ZT Systems appears to be a step toward building out its own comprehensive “systems” offering.
While the acquisition will integrate ZT Systems’ design and customer enablement teams into AMD’s data center solutions group, AMD plans to divest ZT’s manufacturing business to a strategic partner following the completion of the deal. ZT Systems currently generates roughly $10 billion in annual revenue and has a team of approximately 1,000 engineers, which AMD intends to retain.
Following the acquisition, ZT Systems will be integrated into AMD’s Data Center Solutions Business Group. Frank Zhang, ZT Systems’ CEO, will lead the manufacturing business (which will be sold). Doug Huang, ZT Systems’ President, will oversee design and customer enablement teams.
The deal is expected to accelerate the adoption of AMD’s Instinct line of AI data center chips, which compete with NVIDIA’s GPUs. AMD has been slowly making strides in the AI chip market, with its MI300 chips being adopted by some major players like Microsoft for AI model training.
The move follows a series of AI-related investments by AMD, including the $665 million acquisition of Finnish AI startup Silo AI in July, as the company continues to bolster its AI ecosystem.
The transaction is subject to regulatory approvals and customary closing conditions.