AMD To Buy Server Maker ZT Systems Amidst AI Battle

AMD is to acquire data centre server maker ZT Systems for $4.9 billion (£3.8bn) to bolster its efforts to roll out artificial intelligence (AI) chips and hardware in a high-stakes battle with Nvidia.

The Secaucus, New Jersey-based company is to become part of AMD’s Data Center Solutions Business Group, AMD said.

The company said it plans to retain ZT’s design and customer teams and to sell the manufacturing division.

AMD investors sent the company’s shares up as much as 3.5 percent after the announcement of the acquisition, for which AMD is paying 75 percent in cash and 25 percent AMD common stock.

AI infrastructure

“AI is the most transformational technology of the last 50 years and our No. 1 strategic priority,” said AMD chief executive Lisa Su in a call with investors.

She said the acquisition would help AMD’s largest customers deploy its AI infrastructure more rapidly.

ZT’s engineers “understand the challenges of designing and managing high-performance and high-density systems at a massive scale”, Su said.

ZT’s roughtly $10bn of sales in the past 12 months came almost all from its server manufacturing business, which competes with the likes of Dell Technologies, HP Enterprise and Super Micro Computer.

AMD does not want to compete in that area and so is planning to sell the division to a “strategic partner” after the deal closes, Su said.

Engineering talent

She said AMD would retain about 1,000 engineers, giving it an edge in quickly testing and rolling out systems based on its AI graphics processing chips on a large scale for cloud customers.

Privately held ZT has about 2,500 employees.

AMD chief financial officer Jean Hu said the deal would pay for itself by the end of 2025 by facilitating more GPU sales, and would accelerate revenue growth in 2026.

AMD is considered Nvidia’s closest rival in the overheated market for AI chips, but lags far behind Nvidia, which accounted for 98 percent of data centre GPU sales in 2023, according to Techinsights.