ZT Systems


2024-08-20

[News] AMD’s USD 4.9 Billion Acquisition of ZT Systems Signals a Challenge to NVIDIA’s Dominance

On August 19, AMD announced its acquisition of ZT Systems, a cloud computing and AI data center equipment designer, for a total value of USD 4.9 billion. This move is intended to strengthen AMD’s AI computing capabilities, while hinting at its challenge to NVIDIA’s dominance in the AI market.

AMD plans to complete the acquisition in the first half of next year. Industry sources cited in a report from Economic Daily News interpret this move as AMD’s strategy to expand its AI chip market reach, extending its influence from chip design to system integration in the AI sector.

AMD CEO Lisa Su stated in an interview that ZT Systems generates over USD 10 billion in annual revenue, nearly half of AMD’s reported USD 22.7 billion revenue last year.

However, AMD plans to sell off ZT Systems’ manufacturing business after the acquisition is completed, while retaining its system design business. Per a report from Reuters, Su further explained that this decision is because AMD has no plans to compete with companies like Super Micro Computer.

“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 Lisa Su.

AMD will be able to offer a broader range of chips, software, and system designs to large data center clients like Microsoft and Meta after acquiring ZT Systems.

AMD also noted that once the acquisition is finalized, ZT Systems CEO Frank Zhang will remain in his position. In the statement, Frank Zhang expressed that joining AMD will help ZT Systems play a larger role in designing AI infrastructure that defines the future of computing.

Regarding concerns about the potential impact of AMD’s acquisition of ZT Systems on NVIDIA chip supplies, one of ZT Systems’ major shareholders Inventec reassured that existing orders for H100, H200, and GB200 chips will remain unaffected. Current collaboration projects will continue as planned, and the customer base will not change.

Inventec originally partnered with ZT Systems to focus on contract manufacturing for NVIDIA’s Blackwell servers.

Through its facility in Mexico, Inventec was responsible for the assembly of the GB200 server motherboards, while ZT Systems handled further assembly and testing and complete system integration. This collaboration enabled them to secure orders from the four major cloud service providers in North America: Google, Microsoft, Amazon, and Meta.

ZT Systems, founded in 1994 and headquartered in Secaucus, New Jersey, is a privately held company which specializes in designing and manufacturing servers, server racks, and other infrastructure that houses and connects chips for massive data centers, powering AI systems like ChatGPT.

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(Photo credit: AMD)

Please note that this article cites information from AMD, Economic Daily News and Reuters.
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