AMD, the chipmaker close on Nvidia's heels in the AI race, today announced a major purchase to strengthen its position as a "ecosystem" partner for companies establishing large AI businesses: It will pay $4.9 billion to acquire ZT Systems, which provides compute design and infrastructure for AI, cloud, and general purpose computing. The transaction is a combination of cash and shares, with a contingent payout of up to $400 million if certain performance indicators are fulfilled.
The goal is to integrate ZT Systems' computer infrastructure design business. AMD stated it plans to sell ZT Systems' data center infrastructure manufacturing division to "a strategic partner."
ZT Systems, based in New Jersey, has been privately held since its inception in 1994, and has only reported one external investment round, raising $850 million in debt in 2023, according to PitchBook. It collaborates closely with major chipmakers such as Nvidia and Intel on server solutions for storage, GPUs/accelerators, high-performance computing, 5G, and edge computing.
AMD stated that the agreement will provide it with a broader bench of experience in AI systems design that includes not only silicon but also software and systems, potentially allowing AMD to sell more chips (and systems powered by its chips) to clients. AMD stated that it has already committed approximately $1 billion in developing 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 reveal the identities of its clients, but it appears to have gained a reputation in recent years for providing specialised support in some of the most difficult and costly elements of AI computing architecture design.
Frank Zhang, AMD's CEO, will oversee the company's manufacturing operations. ZT Systems will form part of AMD's Data Center Solutions Business Group.
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.