AMD buys server maker ZT Systems in $4.9 billion cash and stock deal as the chipmaker bolsters its artificial intelligence in its efforts to compete with Nvidia.
AMD plans to sell ZT Systems’ server manufacturing business after the deal closes, with mergers and acquisitions in technology and elsewhere getting a closer look from the Biden Administration.
Based in Secaucus, New Jersey, ZT Systems is a privately held company that has been designing and rolling out data center and storage infrastructure systems for cloud enterprises for more than a decade.
The transaction includes a contingent payment of up to $400 million based on post-closing milestones.
AMD is looking to expand its AI capabilities. Over the past year, the company has invested more than $1 billion to expand its AI ecosystem and strengthen its AI software capabilities.
The move is part of an effort to better compete with the tech giant Nvidiawho have experienced almost insatiable demand for his lands to power applications for artificial intelligence.
When AMD’s deal with ZT Systems closes, it will join the AMD Data Center Solutions Business Group. AMD said Monday it will look for a buyer for its US-based data center infrastructure manufacturing business.
The transaction, which was approved by AMD’s board of directors, is expected to close in the first half of next year.
Shares of AMD, based in Santa Clara, Calif., rose more than 3% before the market opened.