AMD’s Desperate Bid to Catch Up to NVIDIA: $4.9 Billion Deal to Acquire ZT Systems
In a shocking move, AMD has announced a $4.9 billion deal to acquire server maker ZT Systems, a desperate attempt to catch up to NVIDIA’s dominance in the lucrative AI chip market. The acquisition marks a significant shift in AMD’s strategy, as the company seeks to expand its portfolio of artificial intelligence chips and hardware.
CEO Lisa Su’s words dripped with desperation as she announced the acquisition, stating that AI systems are "our number one strategic priority." But how will this acquisition help AMD when it’s clear that NVIDIA is running circles around them?
The deal has AMD shelling out 75% cash and the remaining 25% in shares, a significant financial commitment considering the company’s cash reserves. Will this be enough to make up for the gap between AMD and NVIDIA?
ZT Systems, a closely held company with 2,500 employees, will retain about a thousand engineers, according to AMD. But what will happen to the remaining 1,500 employees? Will AMD be laying off half its new workforce in a desperate attempt to justify the acquisition?
NVIDIA, meanwhile, is thriving, expected to generate $105.9 billion from its data centre segment this year. Analysts are left wondering if AMD’s acquisition will be enough to chip away at NVIDIA’s dominance.
With the deal expected to close in the first half of 2025, the question remains: will AMD’s move pay off, or will it merely be a costly attempt to stay in the game? Only time will tell if this acquisition will be a smart investment or a reckless gamble.
