Can AMD Challenge NVIDIA With $4.9B ZT Systems Acquisition?

With the growth of artificial intelligence (AI) and generative AI (GenAI) in full swing, AI technology companies are trying to grow their market share and lead the industry.

As of now, the AI sector is being led by NVIDIA, which enjoyed a market share of around 98% in data-center GPU shipments in 2023 and 2022.

According to a report, NVIDIA shipped around 3.76 million units out of the total 3.85 million units shipped in 2023. In contrast, other AI chip manufacturers remained sidelined.

In a bid to boost its AI infrastructure, compute and inference capabilities and grow its market share, AMD has announced a new agreement with a leading provider of AI infrastructure for the world’s largest hyperscale computing companies, ZT Systems.

So, what did the two leading AI companies reveal about their deal? Let’s explore!
 

What Is The AMD And ZT Systems Agreement About?

 

• Through a news release published on both AMD’s and ZT Systems’ websites, the two companies announced that AMD has signed a definitive agreement to acquire ZT Systems.

• The deal will see a cash and stock transaction valued at $4.9 billion. This includes $400 million as a contingent payment subject to certain post-closing milestones.

• AMD expects the move to be completed by the end of 2025 on a non-GAAP basis.

• While the transaction has been unanimously approved by the AMD Board of Directors, it’s expected to close in the first half of 2025, subject to customary closing conditions and regulatory approvals.

• The move forms a major step in AMD’s aim to deliver powerful AI training and inferencing solutions across silicon, software and systems.

• AMD will be able to draw from ZT Systems’ extensive experience of over 15 years in designing and optimizing cloud computing solutions, which will help its cloud and enterprise customers deploy AMD-powered AI infrastructure at scale.

• Additionally, it will bring ZT Systems’ capabilities of designing, integrating, manufacturing and deploying data center AI compute and storage infrastructure, which has made the company a leader in AI training and inference infrastructure.

• Upon closing of the transaction, ZT Systems will join AMD’s Data Center Solutions Business Group.

• This will see current ZT Systems CEO Frank Zhang head the manufacturing business, while ZT President Doug Huang will head the design and customer enablement teams.

• The two executives will report to AMD Executive Vice President and General Manager Forrest Norrod.

• As per the release, “AMD will seek a strategic partner to acquire ZT Systems’ industry-leading US-based data center infrastructure manufacturing business.”

 

What Did AMD And ZT Systems Executives Say?

 

• Dr. Lisa Su, AMD Chair and CEO, said, “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.”

• [Contd.] “ZT adds world-class systems design and rack-scale solutions expertise that will significantly strengthen our data center AI systems and customer enablement capabilities. This acquisition also builds on the investments we have made to accelerate our AI hardware and software roadmaps.”

• [Contd.] “Combining our high-performance Instinct AI accelerator, EPYC CPU, and networking product portfolios with ZT Systems’ industry-leading data center systems expertise will enable AMD to deliver end-to-end data center AI infrastructure at scale with our ecosystem of OEM and ODM partners.”

• Frank Zhang, CEO of ZT Systems, said, “We are excited to join AMD and together play an even larger role designing the AI infrastructure that is defining the future of computing.”

• [Contd.] “For almost 30 years we have evolved our business to become a leading provider of critical computing and storage infrastructure for the world’s largest cloud companies.”

• [Contd.] “AMD shares our vision for the important role our technology and our people play designing and building the computing infrastructure powering the largest data centers in the world.”

In the last few months, AMD has made a wide range of moves to boost its efforts of challenging rivals NVIDIA. This includes revealing new AI chips, acquiring a major European AI lab, Silo AI, as well as being requested by a customer to build the world’s most powerful supercomputer consisting of 1.2 million GPUs.

Do you think this move will allow AMD to grow its customer base and capture a better market share in the AI market? Do you think this move will help it challenge NVIDIA in the AI infrastructure and computing industry?

Let us know in the comments below!