AMD to acquire infrastructure player ZT Systems for $4.9B to amp up its AI ecosystem play

August 19, 2024

AMD, the chipmaker hot on the heels of Nvidia, today announced a big acquisition to boost its position as an “ecosystem” partner for companies building big AI businesses: it is acquiring ZT Systems, which provides compute design and infrastructure for AI, cloud and general purpose computing, for $4.9 billion. The deal is a mix of cash and stock and includes a contingent payment of up to $400 million if certain performance metrics are met.

The plan is to incorporate ZT Systems’ computing infrastructure design business. AMD said it will look to sell ZT Systems’ data center infrastructure manufacturing business to “a strategic partner.”

Based in New Jersey, ZT Systems has been privately-held since it was founded in 1994, and has disclosed only one external funding round — it raised $850 million in debt in 2023, according to PitchBook. It works closely with big chipmakers such as Nvidia and Intel across areas such as server solutions for storage, GPU/accelerators, high-performance computing, 5G, and edge computing.

AMD said the deal will give it a deeper bench of expertise in AI systems design involving not just silicon, but software and systems — that could help AMD sell more of its chips (and systems powered by its chips) to customers. AMD said it has already invested about $1 billion in building its broader ecosystem.

There is a need for that enhanced approach: As AI systems grow more complex, one major priority for big tech companies building and operating them will be to increase the efficiency of their systems for the most compute-heavy aspects such as AI model training and inferencing.

“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,” AMD chair and CEO, Dr. Lisa Su, said in a statement. “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.”

ZT Systems does not disclose the names of its clients, but it appears to have increased its profile in recent years for providing specialist support in some of the thorniest and most expensive aspects of AI computing architecture design.

Its CEO Frank Zhang will lead AMD’s manufacturing business. ZT Systems will become a part of AMD’s Data Center Solutions Business Group.

“We are excited to join AMD and together play an even larger role designing the AI infrastructure that is defining the future of computing,” said Zhang, CEO of ZT Systems, in a statement. “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.”

ZT President Doug Huang will lead the design and customer enablement teams, and both will report to AMD executive vice president and general manager, Forrest Norrod.

The deal is expected to close in the first half of 2025.

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