American multinational corporation Advanced Micro Devices (AMD), a close rival to Nvidia in the AI chip market, has made a significant move to enhance its capabilities as a comprehensive partner for businesses developing large-scale AI solutions. The company has agreed to acquire ZT Systems, a leading provider of AI, cloud, and general-purpose computing infrastructure and design expertise, in a deal valued at $4.9 billion. The acquisition combines cash and stock, with an additional potential payment of up to $400 million tied to specific performance targets.
AMD intends to integrate ZT Systems’ “computing infrastructure design business” into its operations. Meanwhile, the company plans to divest ZT Systems’ “data center infrastructure manufacturing business” by selling it to “a strategic partner.”
ZT Systems, a privately held company based in New Jersey since 1994, has only disclosed one external funding round – $850 million in debt financing in 2023, according to PitchBook. The company has built close relationships with major chipmakers such as Nvidia and Intel, working together on server solutions, GPU/accelerators, high-performance computing, 5G, and edge computing initiatives.
AMD believes the acquisition will enhance its expertise in AI systems design, encompassing not only silicon but also software and systems. This expanded capability is expected to drive sales of AMD’s chips and systems powered by its chips to customers. AMD has already invested around $1 billion in developing its ecosystem. This strategic move is crucial as AI systems become increasingly complex, and major tech companies prioritize improving efficiency in compute-intensive areas like AI model training and inferencing to optimize their systems’ performance.
“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,” said Dr. Lisa Su, AMD Chair & CEO
Dr Lisa emphasized that the acquisition enhances AMD’s capabilities in data center AI systems and customer enablement,
“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. 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.” added Dr. Lisa
Although ZT Systems maintains client confidentiality, the company has established itself as a specialist in addressing challenging and high-cost aspects of AI computing architecture design. As part of the acquisition, Frank Zhang, ZT Systems’ CEO will lead AMD’s manufacturing business. ZT Systems will also become a key component of AMD’s Data Center Solutions Business Group.
“We are excited to join AMD and together play an even larger role in designing the AI infrastructure that is defining the future of computing. 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. 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.” said Zhang
Following the acquisition, ZT Systems’ President Doug Huang will oversee the design and customer enablement teams, with both teams reporting to Forrest Norrod, AMD’s Executive Vice President and General Manager. The acquisition is anticipated to be finalized in the first half of 2025.
