do that? With the acquisition of the server maker ZT Systems for $4.9 billion in a cash and stock value deal.
AMD will purchase the ZT System with 75% of the amount in cash and the rest in stock value. In the second quarter, the AMD chips company had recorded about $5.34 billion divided into cash and short-term investments.
Lately, the computing requirements for AI power have become more important and the companies had to purchase thousands of chips to reach the necessary amount of data processing power.
In an interview with Reuters, the CEO of AMD company Lisa Su said that Artificial intelligence power is a priority in the company right now. "AI systems are our number one strategic priority,".
Also, the CEO stated that with the addition of engineers from ZT Systems, the AMD chips company will be able to run more tests to launch the latest AI graphics processing units (GPUs) and to rise to a level comparable to the giant Microsoft. "The main way (ZT Systems) is additive to the company is we sell more GPUs,"
After these announcements, AMD's shares have increased by more than 2% while Nvidia's shares have increased by only 1.2%.
According to Lisa Su, AMD is planning to stop and sell the server manufacturing business after this deal ends because they don't want to compete with companies like Super Micro Computer. For now, this remains just an idea as AMD hasn't talked or negotiated yet with some potential buyers.
Who will join this transition at AMD? The Chief Executive of ZT Systems, Frank Zhang will join and report to the data center chief of AMD, Forrest Norrod. Along with him, another 1,000 employees out of the initial 2500 from ZT Systems will come to AMD with the cost of $150 million in annualized operating expenses.
This deal will likely close in the first half of the year 2025 with an additional time of 12 to 18 months to close the deal manufacturing business. The AMD company wants this deal to help the adjusted financial performance by the end of 2025.
We are excited to see how the AMD chips company will make the transition to make some AMD chips with AI power and how they will close the deal about the server manufacturing operation. Until then stay tuned for other AMD news.
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