Chipmaker AMD, which is closing in on Nvidia, today announced a major acquisition to bolster its position as an “ecosystem” partner for companies building large-scale AI businesses: It will buy ZT Systems, a provider of computing design and infrastructure for AI, cloud and general-purpose computing, for $4.9 billion. The deal is a combination of cash and stock and includes a contingent payment of up to $400 million if certain performance criteria are met.
The plan would combine AMD's computing infrastructure design business with ZT Systems, and AMD said it was exploring the sale of ZT Systems' data center infrastructure manufacturing business to a “strategic partner.”
New Jersey-based ZT Systems has been privately held since its founding in 1994 and has only publicly disclosed one external funding round. The company raised $850 million in debt in 2023, according to PitchBook. The company works closely with major chipmakers such as Nvidia and Intel in areas such as storage, GPUs/accelerators, high-performance computing, 5G and server solutions for edge computing.
AMD said the acquisition deepens its expertise in AI system design — not just silicon but also software and systems — and will enable it to sell more chips (and systems that house them) to customers. AMD said it has already invested about $1 billion in building out the broader ecosystem.
This strengthened approach is necessary: As AI systems grow in complexity, one of the big priorities for the large technology companies that build and operate them is to make them more efficient in their most compute-intensive aspects, such as training and inference of AI models.
“The acquisition of ZT Systems marks the next big step in our long-term AI strategy to provide leadership training and inference solutions that can be deployed quickly at scale across our cloud and enterprise customers,” said Dr. Lisa Su, AMD chairman and CEO, in a statement. “ZT brings world-class system design and rack-scale solution expertise that significantly strengthens our data center AI systems and customer enablement capabilities. This acquisition builds on the investments we've made to accelerate our AI hardware and software roadmap. Combining our high-performance Instinct AI accelerators, EPYC CPUs and networking product portfolio with ZT Systems' industry-leading data center systems expertise will enable AMD to deliver end-to-end data center AI infrastructure at scale with an ecosystem of OEM and ODM partners.”
ZT Systems does not disclose the names of its clients, but it appears to have gained a reputation in recent years for providing expert support in some of the most difficult and costly aspects of AI computing architecture design.
The company's CEO, Frank Zhang, will lead AMD's manufacturing business. ZT Systems will become part of AMD's Datacenter Solutions business group.
“We are excited to join AMD and together we can play an even bigger role in designing the AI infrastructure that will define the future of computing,” ZT Systems CEO Zhang said in a statement. “Over nearly three decades, we have evolved our business to become a leading provider of critical compute and storage infrastructure for the world's largest cloud companies. AMD shares our same vision for the critical role our technology and people play in designing and building the computing infrastructure that powers the world's largest data centers.”
ZT president Doug Huang will lead the design and customer advocacy teams, both of whom will report to AMD executive vice president and general manager Forrest Norrod.
The transaction is expected to close in the first half of 2025.