Why AMD is buying ZT systems for $4.9 billion
AMD buys a wealth of engineering talent with their ZT systems acquisition
Hot of the heels of their Silo AI acquisition, AMD has announced that they will be buying ZT systems for $4.9 billion. This deal is expected to close in the first half of 2025, subject to regulatory approval.
ZT Systems is a privately owned company that designs and manufacturers high performance systems and servers for hyperscalers. AMD has made it clear that they do not want to compete with their customers and start manufacturing servers. With this in mind, this acquisition seems like a strange one for AMD, until you consider the company’s talent pool.
Below is what AMD’s CEO, Lisa Su, had to say about the acquisition.
“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 AMD Chair and CEO Dr. Lisa Su. “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.”
AMD’s buying ZT Systems for its engineers
When this acquisition is finished, AMD will “seek strategic partner to acquire ZT Systems’ industry-leading manufacturing business”. That means that AMD will be recouping some of their acquisition costs by selling ZT System’s manufacturing segment. That leaves AMD with around 1,100 ZT Systems engineers to add to their talent pool. These systems engineers have a deep knowledge of their field and years of real-world engineering experience. That talent is valuable, and cannot be obtained without acquiring a company like ZT Systems.
If you look at this acquisition on a cost-per-engineer basis, AMD is basically paying around $4.5 million for each of ZT’s engineering staff. While this will be offset by the sale of ZT Systems’ manufacturing business, it highlights AMD’s desire for strong engineering talent.
Simply put, AMD are buying ZT System’s talent and aims to sell their manufacturing business to the highest bidder. Yes, this acquisition is costly for AMD, but it will boost AMD’s talent pool and greatly accelerate AMD’s server and systems roadmaps. In essence, AMD will be moving from having a pool of around 500 system designers and engineers to a pool of around 1,600. Now that’s a HUGE boost in engineering power.
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