AMD is expanding its presence in the industry with the acquisition of ZT Systems, a server supplier and cloud computing expert, for $4.9 billion. This move is part of AMD’s ongoing effort to bolster its AI capabilities.
ZT Systems, established in 1994, has been instrumental in partnering with chip manufacturers to create and implement AI compute and storage solutions for major global cloud companies. The company’s portfolio includes servers for storage, GPUs/accelerators, high-performance computing, 5G, and edge computing.
AMD CEO Lisa Su commented, “The acquisition of ZT Systems represents a significant phase in our AI strategy, focusing on delivering superior training and inferencing solutions that our cloud and enterprise clients can deploy extensively and swiftly.”
Anticipated to finalize in the first half of 2025, the acquisition will merge ZT Systems into AMD’s Data Center Solutions Business Group. Post-acquisition, ZT CEO Frank Zhang will head the manufacturing division, and ZT President Doug Huang will oversee the 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.
