The cloud computing segment is rapidly developing in the wake of the artificial intelligence boom; many large market participants are expressing interest in strengthening vertical integration by switching to components of their own design. Amazon is no exception, its cloud division AWS intends to reduce its dependence on long-time partner ZT Systems, which is now owned by AMD.
Image Source: AMD
It is worth recalling that the server equipment manufacturer ZT Systems, which has been operating in the US market for more than 29 years, was decided to be bought by AMD in August of this year, which is interested in getting closer to customers in the server segment. Thus, AMD expects to sell more of its own computing accelerators. The initial structure of the deal between AMD and ZT Systems assumed that the latter’s business of producing infrastructure solutions for the server segment would be sold to a certain strategic partner.
Business Insider has obtained an AWS document for internal use, which states the cloud giant’s intentions to reduce costs through cooperation with ZT Systems. At the end of last year, AWS spent almost $2 billion on the purchase of solutions from this company. The reason for such changes was the transition of AWS to the priority use of solutions of its own development. The latter, in some cases, can improve the efficiency of server systems and reduce associated costs.
In any case, AWS is forced to spend enormous sums on developing its server infrastructure. This year, the company’s capital expenditures should reach $75 billion, and next year they will be even higher. By the way, ZT Systems can still produce its own solutions for AWS. The purchase of this company by AMD did not particularly influence AWS’s decision to move away from ZT Systems, but some Amazon representatives consider AMD a competitor in the computing accelerator segment. Being the largest player in the cloud segment, AWS is actively purchasing AMD central processors, but has not yet shown much interest in the latest computing accelerators of the Instinct family, explaining this by the lack of demand from its customers.