AMD said that it would pay for 75% of the ZT Systems acquisition with cash with the remainder in stock.
The company’s decision to buy ZT Systems comes as the computing requirements for AI have increased significantly and have resulted in company’s delivering whole server systems, hence AMD’s decision to acquire ZT Systems.
Speaking with Reuters, AMD’s CEO Lisa Su said, "AI systems are our number one strategic priority,” and that by acquiring ZT Systems AMD would be in a better position to more quickly test and roll out its latest AI graphics processing units (GPUs) at the scale cloud computing giants require.
"The main way (ZT Systems) is additive to the company is we sell more GPUs," according to Su.
AMD plans to break off its server manufacturing business and sell it once the deal is completed but has yet to hold talks with any potential buyers.
ZT Systems Chief Executive Frank Zhang will join AMD and report to AMD's data centre chief, Forrest Norrod.
ZT Systems currently has 2,500 employees and AMD said it plans to retain about 1,000 of them, which will result in about $150 million in annualised operating expenses.
Currently ZT Systems generates annual revenue of roughly $10 billion, most of which is derived from its manufacturing unit.
Executives expect the deal to close in the first half of 2025 and expect an additional 12 to 18 months to sell the manufacturing business.
AMD has forecasted $4.5 billion in AI chip revenue this year.
