AMD is set to acquire infrastructure provider ZT Systems for $4.9 billion to strengthen its AI ecosystem strategy.

AMD, a leading chipmaker closely competing with Nvidia in the AI sector, announced a significant acquisition to strengthen its role as a key partner for companies developing large AI businesses. AMD is acquiring ZT Systems, a company that specializes in compute design and infrastructure for AI, cloud, and general-purpose computing, for $4.9 billion.

The deal involves a combination of cash and stock, with an additional contingent payment of up to $400 million based on the achievement of certain performance targets.

AMD plans to integrate ZT Systems’ computing infrastructure design business while seeking to sell its data center infrastructure manufacturing business to a “strategic partner.” ZT Systems, based in New Jersey, has been privately held since its founding in 1994 and has only disclosed one external funding round—raising $850 million in debt in 2023.

The company works closely with major chipmakers like Nvidia and Intel, focusing on areas such as server solutions for storage, GPUs/accelerators, high-performance computing, 5G, and edge computing.

AMD stated that the acquisition will enhance its expertise in AI systems design, encompassing not just silicon but also software and systems, potentially boosting sales of its chips and chip-powered systems. AMD has already invested around $1 billion in expanding its broader ecosystem.

The acquisition comes at a crucial time as AI systems become increasingly complex, with big tech companies prioritizing the efficiency of systems for compute-intensive tasks like AI model training and inferencing. AMD’s chair and CEO, Dr. Lisa Su, described the acquisition as a key move in AMD’s long-term AI strategy, aimed at delivering leading solutions for training and inferencing that can be rapidly deployed at scale across cloud and enterprise customers.

The addition of ZT Systems’ expertise in systems design and rack-scale solutions will significantly bolster AMD’s data center AI systems and customer support capabilities.

ZT Systems, which does not publicly disclose its clients, has gained recognition in recent years for providing specialized support in some of the most challenging and costly aspects of AI computing architecture design. The company’s CEO, Frank Zhang, will lead AMD’s manufacturing business, with ZT Systems becoming part of AMD’s Data Center Solutions Business Group.

Zhang expressed excitement about joining AMD and expanding their role in designing AI infrastructure that shapes the future of computing. ZT Systems’ president, Doug Huang, will oversee the design and customer support teams, reporting to AMD executive vice president and general manager, Forrest Norrod.

The acquisition is expected to be finalized in the first half of 2025.