AMD will spend $5 billion to buy server maker ZT Systems to “sell more GPUs”

AMD today announced that it has reached an agreement to purchase ZT Systems, a manufacturer of infrastructure solutions for the server segment, which has been operating in the American market for more than 29 years, more than half of which the company has been collaborating with large cloud service providers. The deal is scheduled to close in the first half of next year.

Image source: ZT Systems

The total transaction value, including cash payments (75%) and share exchange (25%), will be $4.9 billion, and will include a future payment of $400 million, which will be received by the seller if certain conditions are met. According to AMD, the purchase of an experienced server hardware manufacturer and infrastructure solutions provider will allow the company to accelerate the expansion of its own components for the artificial intelligence systems segment. At the same time, AMD’s cooperation with other partners in this area will continue to develop.

After purchasing the assets of ZT Systems, they will become part of the AMD Data Center Solutions division. The acquired company’s CEO, Frank Zhang, will lead the manufacturing business, and ZT Systems President Doug Huang will be responsible for product development and customer relations, both reporting to executive vice president and division head Forrest Norrod. Norrod). It is interesting that AMD is going to acquire the production capacity of ZT Systems for the production of server systems in the United States with the participation of a certain strategic partner. That is, this business will be separated from the AMD structure and sold to new owners. Buyers have not yet been identified. The deal has already been approved by AMD’s board of directors, and now, after approvals from regulators, it should be closed in the first half of next year.

AMD CEO Lisa Su told Reuters about the deal, “The biggest benefit AMD will get from this deal is the ability to sell more GPUs.” Of the approximately 2,500 ZT Systems employees, approximately 1,000 people will join AMD. Until recently, ZT Systems generated approximately $10 billion in revenue annually. It will take approximately 12 to 18 months to sell the company’s manufacturing assets after the AMD deal closes. From the second half of next year, the financial results of the former ZT Systems will be displayed in AMD’s financial statements.