AMD acquires ZT Systems in a USD $4.9 billion AI strategy move

AMD has signed a definitive agreement to acquire ZT Systems, a significant provider of AI and general-purpose compute infrastructure for large-scale hyperscale providers. The deal, valued at USD $4.9 billion, is part of AMD's broader strategy to deliver comprehensive AI solutions. This transaction includes a contingent payment of up to USD $400 million based on certain post-closing milestones and is expected to close in the first half of 2025, subject to regulatory approvals and other conditions.

"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's Chair and CEO. "ZT adds world-class systems design and rack-scale solutions expertise that will significantly strengthen our data centre 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 centre systems expertise will enable AMD to deliver end-to-end data centre AI infrastructure at scale with our ecosystem of OEM and ODM partners."

ZT Systems, headquartered in Secaucus, New Jersey, has over 15 years of experience in designing and deploying data centre AI compute and storage infrastructure for some of the world's largest cloud companies. The involvement of ZT Systems in this acquisition will see the company's design, integration, manufacturing, and deployment capabilities integrated within AMD's data centre solutions. Following the transaction, ZT Systems will be part of the AMD Data Centre Solutions Business Group. ZT CEO Frank Zhang will lead the manufacturing business, and ZT President Doug Huang will lead the design and customer enablement teams, both reporting to AMD Executive Vice President and General Manager Forrest Norrod.

Frank Zhang, CEO of ZT Systems, commented, "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 in designing and building the computing infrastructure powering the largest data centres in the world."

In alignment with this acquisition, AMD aims to seek a strategic partner to acquire ZT Systems' manufacturing business, which is regarded as industry-leading within the U.S. This move is part of AMD's extensive investment strategy to enhance its AI capabilities. Over the past year, AMD has invested more than USD $1 billion in expanding its AI ecosystem and strengthening its AI software capabilities.

The transaction has been unanimously approved by the AMD Board of Directors and is anticipated to be accretive on a non-GAAP basis by the end of 2025. Citi is acting as the exclusive financial advisor to AMD, with Latham & Watkins LLP serving as its legal advisor. Goldman Sachs & Co. LLC is the exclusive financial advisor to ZT Systems, with Paul, Weiss, LLP as its legal advisor.