Advanced Micro Devices (AMD) has announced its acquisition of ZT Systems, a server manufacturer based in Secaucus, New Jersey, for $4.9 billion in a cash-and-stock transaction. This move is aimed at enhancing AMD’s artificial intelligence (AI) capabilities, positioning the company to better compete with industry leader Nvidia.
ZT Systems, a private company with over a decade of experience in designing and deploying data center and storage infrastructure for cloud service providers, will become part of AMD’s Data Center Solutions Business Group once the deal is finalized. The acquisition includes a contingent payment of up to $400 million, tied to specific milestones after the closing.
In addition to integrating ZT Systems, AMD plans to divest its U.S.-based data center infrastructure manufacturing business following the transaction. This decision comes at a time when mergers and acquisitions, particularly in the tech sector, are facing increased scrutiny from the Biden administration.
Over the past year, AMD has invested more than $1 billion to expand its AI ecosystem and enhance its AI software capabilities, as part of its strategy to compete more effectively with Nvidia. The deal with ZT Systems is seen as a critical step in bolstering AMD’s AI portfolio.
The transaction, which has received approval from AMD’s board of directors, is expected to close in the first half of 2025, pending regulatory approvals. Following the announcement, AMD’s shares rose over 3% in pre-market trading.
