AMD betting big to take on Nvidia, to buy ZT Systems in a massive $4.9 billion deal

tech.hindustantimes.com:

Advanced Micro Devices Inc. agreed to buy server maker ZT Systems in a cash and stock transaction valued at $4.9 billion, adding data center technology that will bolster its efforts to challenge Nvidia Corp. 

ZT Systems, based in Secaucus, New Jersey, will become part of AMD's Data Center Solutions Business Group, according to a statement Monday. AMD will retain the business's design and customer teams and look to sell the manufacturing division. The purchase price includes a contingent payment of $400 million based on certain milestones. 

AMD investors applauded the deal, sending the shares up as much as 4.2% in New York on Monday. The transaction consists of 75% cash and 25% AMD common stock.

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Closely held ZT has extensive experience making server computers for owners of large data centers — the kind of customers that are pouring billions of dollars into new artificial intelligence capabilities. 

“AI is the most transformational technology of the last 50 years and our No. 1 strategic priority,” AMD Chief Executive Officer Lisa Su said in a call with investors on Monday, adding that the ZT takeover will allow the company's largest customers to more rapidly deploy AMD's AI infrastructure. ZT's engineers “understand the challenges of designing and managing high-performance and high-density systems at a massive scale,” she said. 

The company has its sights set on Nvidia, the runaway leader in the market for data center gear needed to support AI computing. AMD is adding software and hardware capabilities that will better match the breadth of Nvidia's offerings and speed the uptake of its chips. 

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AMD is the second-biggest provider of the graphics processors that have become so vital to developing AI software. And it's spent more than $1 billion in the last 12 months