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AMD Acquires ZT Systems for $4.9B: AI Race Heats Up

AMD acquires ZT Systems for $4.9B, closing in 2025, to boost its AI and cloud computing capabilities, aiming to challenge Nvidia’s dominance in the AI market.

Written By

Allison Francis

Aug 21, 2024

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In a bold move to challenge Nvidia’s dominance in the AI arena, AMD has announced the acquisition of ZT Systems for a hefty $4.9 billion.

The chipmaker aims to fortify its position in the cloud computing market by combining its powerful AI chips with ZT Systems’ expertise in building high-performance data center infrastructure. With the AI gold rush in full swing, AMD is betting big that this strategic alliance will enable it to compete head-to-head with Nvidia’s extensive network of partners.

Consolidating expertise

ZT Systems, a Secaucus, New Jersey-based company, will join AMD’s Data Center Solutions Business Group. AMD plans to retain the company’s design and customer teams but will sell off the manufacturing division.

“Our acquisition of ZT Systems is 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,” said AMD chair and CEO Lisa Su in a statement. She also added that “AI is the most transformational technology of the last 50 years and our No. 1 strategic priority.”

ZT’s CEO, Frank Zhang, will head up the manufacturing operations, while Doug Huang, the company’s president, will oversee product design and customer relations. Both will report to AMD’s Forrest Norrod, according to MSN. To avoid potential regulatory hurdles, AMD plans to sell off ZT’s server manufacturing business.

“We are excited to join AMD and together play an even larger role designing the AI infrastructure that is defining the future of computing,” said Zhang. “AMD shares our vision for the important role our technology and our people play [in] designing and building the computing infrastructure powering the largest data centers in the world.”

AMD’s board of directors has unanimously approved the acquisition. The deal is expected to close in the first half of 2025.

Building an AI powerhouse

According to R&D World, AMD has significantly invested in expanding its AI software capabilities and research, allocating over $1 billion in the past year. This substantial commitment underscores the company’s strategic focus on becoming a dominant player in the AI market. The acquisition of ZT Systems, coupled with previous software acquisitions (Silo AI, Nod.ai, and Mipsology), positions AMD to effectively compete with industry leader NVIDIA. These strategic moves enhance AMD’s ability to provide customers with comprehensive AI solutions, including advanced software tools to optimize large language models.

AMD’s acquisition of ZT Systems could be a rather pivotal move in its quest to expand its footprint in cloud computing and AI. The company will need substantial growth to challenge industry leader Nvidia, which currently holds an estimated 88% market share compared to AMD’s 12%.

While Nvidia’s dominance is undeniable, smaller companies often possess greater flexibility to rapidly develop innovative solutions. AMD’s strategic move positions it to potentially capitalize on this advantage.

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Allison Francis

Allison is a contributing writer for Channel Insider, specializing in news for IT service providers. She has crafted diverse marketing, public relations, and online content for top B2B and B2C organizations through various roles. Allison has extensive experience with small to midsized B2B and channel companies, focusing on brand-building, content and education strategy, and community engagement. With over a decade in the industry, she brings deep insights and expertise to her work. In her personal life, Allison enjoys hiking, photography, and traveling to the far-flung places of the world.

AMD Acquires ZT Systems for $4.9B: AI Race Heats Up

Consolidating expertise

Building an AI powerhouse

Allison Francis

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