Semiconductor and graphics leader AMD has officially announced its agreement to acquire ZT Systems, marking a significant move in its AI data center strategy.

The deal, valued at approximately £3.7 billion ($4.9 billion), is expected to strengthen AMD’s position in the artificial intelligence (AI) data center space and intensify competition with industry rival NVIDIA.

ZT Systems specializes in the design and production of servers, server racks, and related infrastructure for data centers. With the escalating demand for AI-driven services, data centers are increasingly adopting high-performance computing chips from companies like AMD and NVIDIA.

AMD appears to be more interested in ZT Systems’ design expertise than its manufacturing capabilities. The company revealed plans to find a strategic buyer for ZT Systems’ data center infrastructure manufacturing unit. This move aligns with AMD’s broader goal of steering clear of direct competition in manufacturing while concentrating on leveraging ZT Systems’ engineering know-how to bolster its AI products.

Dr. Lisa Su, AMD’s Chair and CEO, emphasized the alignment of this acquisition with AMD’s AI roadmap. She described the ZT Systems deal as a critical step in advancing the company’s AI objectives, aiming to deliver scalable solutions for cloud and enterprise users.

Su also noted that ZT Systems’ proficiency in system design and rack-scale solutions would substantially enhance AMD’s AI systems capabilities, improving customer experience and adaptability.

“Integrating our high-performance Instinct AI accelerators, EPYC processors, and networking products with ZT Systems’ leading data center expertise positions AMD to offer comprehensive AI infrastructure solutions at scale, in partnership with OEM and ODM leaders,” Su remarked.

Details of the Acquisition

The acquisition, valued at £3.7 billion ($4.9 billion), includes a contingent payment of up to £306 million ($400 million) based on certain post-acquisition milestones. The transaction, structured as 75% cash and 25% AMD stock, has gained unanimous approval from AMD’s board and is expected to close in the first half of 2025, pending regulatory approvals.

ZT Systems’ CEO, Frank Zhang, expressed enthusiasm about contributing more significantly to the development of AI infrastructure that is shaping the future of computing.

“AMD aligns with our vision of the essential role our technology and workforce play in constructing the computing frameworks powering the globe’s largest data centers,” Zhang commented.

This acquisition is the latest in a series of strategic investments by AMD, focusing on enhancing AI capabilities in a fast-evolving market. In the past year alone, AMD has allocated over £766 million ($1 billion) to broaden its AI ecosystem, including acquiring Nod.ai, a software company specializing in AI adoption acceleration across cloud, edge, and endpoint devices. These initiatives underscore AMD’s dedication to closing the competitive gap with NVIDIA, particularly in system design, software, and networking.

Citi is acting as AMD’s exclusive financial advisor, with Latham & Watkins LLP providing legal counsel. Goldman Sachs & Co. LLC serves as the exclusive financial advisor to ZT Systems, supported by legal counsel from Paul, Weiss, LLP