In a bold move to challenge Nvidia’s dominance in the AI infrastructure market, Advanced Micro Devices (AMD) has announced the acquisition of ZT Systems for $4.9 billion in cash and stock. The California-based chipmaker aims to accelerate the adoption of its Instinct line of AI data center chips through this strategic purchase. ZT Systems, a private company with three decades of experience, specializes in building custom computing infrastructure for the largest AI hyperscalers, which include tech giants like Microsoft, Meta, and Amazon.
By bringing ZT Systems under its umbrella, AMD gains access to a team of 1,000 world-class design engineers, enabling the company to develop silicon and systems in parallel and deploy the latest AI infrastructure in data centers more rapidly. AMD CEO Lisa Su emphasized the importance of this acquisition, stating that it will help the company deploy its technology much faster, in line with customer demands.
The transaction, subject to regulatory approval, is expected to close in the first half of 2025, after which ZT Systems will be integrated into AMD’s data center business group. The acquisition comes as AMD strives to break Nvidia’s grip on the AI data center chip market, which has seen Nvidia temporarily become the world’s most valuable company due to significant investments from big tech companies in its chips for training and deploying advanced AI models.
AMD’s move to acquire ZT Systems demonstrates the chipmaker’s commitment to building its own end-to-end computing infrastructure, similar to Nvidia’s successful “systems” approach. AMD launched its MI300 line of AI chips last year and plans to introduce the next-generation MI350 chip in 2025 to compete with Nvidia’s new Blackwell line of GPUs. The company has already seen success with the MI300, with Microsoft adopting it for its Azure cloud platform to run AI models like OpenAI’s GPT-4.
AMD’s data center revenue for these chips surpassed $1 billion for the first time in the quarter ending June 30, 2023. Despite this progress, AMD’s data center revenue still represents a small portion of Nvidia’s $22.6 billion data center business for the quarter ending April 30, 2023. However, with the acquisition of ZT Systems and the company’s ongoing investments in AI hardware and software, AMD is well-positioned to close the gap and become a formidable competitor in the AI infrastructure market.
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