AMD is set to acquire ZT Systems for $4.9 billion. The transaction is a combination of cash and stock including a payment of $400 million conditional upon achieving specific performance metrics. ZT Systems specializes in designing and manufacturing computing infrastructure for AI, cloud and general-purpose computing. With over 30 years in the industry, ZT Systems has become a trusted partner for some of the world’s largest data centers.
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The deal is valued at $4.9 billion, a combination of 75% cash and 25% AMD stock. The acquisition is designed to enhance AMD’s AI and data center capabilities.
AMD had $5.34 billion in cash and short-term investments by the end of the second quarter providing it with the financial flexibility to execute this acquisition without impacting its liquidity.
ZT Systems is headquartered in Secaucus, New Jersey and it is a privately held company with a presence in the data center and storage infrastructure market.
ZT Systems generates approximately $10 billion in annual revenue. Of ZT Systems’ 2,500 employees, AMD plans to retain around 1,000 engineers, ensuring that the intellectual capital and technical expertise that made ZT Systems successful remain intact.
According to AMD CEO Lisa Su, AI systems are the company’s top strategic priority. The acquisition of ZT Systems will allow AMD to accelerate the deployment of its AI hardware particularly its graphics processing units (GPUs).
Nvidia has been a leader in supplying chips for AI applications with expectations of generating $105.9 billion from its data center segment this year alone.
Over the past year AMD has invested over $1 billion in its AI ecosystem focusing on both hardware and software capabilities.
The acquisition of ZT Systems is an extension of these efforts potentially increasing AMD’s AI chip revenue, which is expected to be around $4.5 billion this year.
AMD has no plans to enter the server manufacturing business. Instead AMD intends to spin off ZT Systems’ server manufacturing operations after the deal is finalized.
Although AMD has not yet initiated discussions with buyers for the server manufacturing business, the company plans to explore these opportunities once the acquisition is complete.
The transaction has received approval from AMD’s board and is anticipated to close in the first half of 2025, subject to regulatory approvals and other customary closing conditions.
AMD expects ZT Systems to contribute to its adjusted financial performance by the end of 2025 with additional benefits potentially realized in the following 12 to 18 months as the company seeks to divest the server manufacturing business.
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With ZT Systems’ integration, AMD gains a deeper bench of expertise in AI systems design, spanning silicon, software and full system solutions.
AMD’s acquisition is also expected to expand its customer base among cloud and enterprise clients who require advanced AI and computing solutions.
AMD CEO Dr. Lisa Su addressed that the acquisition is a key step in AMD’s AI strategy enabling the company to deliver end-to-end data center AI infrastructure.
ZT Systems will be integrated into AMD’s Data Center Solutions Business Group. The company’s CEO, Frank Zhang will lead AMD’s manufacturing business, while President Doug Huang will head the design and customer enablement teams.
Both executives will report to Forrest Norrod, AMD’s Executive Vice President and General Manager.
Following the announcement AMD’s shares rose by 2.5% in premarket trading. This rise indicates positive market sentiment regarding AMD’s expanded role in the AI infrastructure space.
AMD’s acquisition of ZT Systems comes at a time when the AI market is growing with tech giants investing heavily in AI infrastructure.
By strengthening its data center AI capabilities, AMD is positioning itself as a competitor to Nvidia, which is projected to generate $100 billion in data center revenue this fiscal year.
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