AMD to acquire infrastructure player ZT Systems for $4.9B to amp up its AI ecosystem play

AMD, the chipmaker hot on the heels of Nvidia in the AI computing race, today announced a big acquisition to boost its position as an “ecosystem” partner for companies building big artificial intelligence computing businesses: it announced that it will acquire ZT Systems, which provides compute design and infrastructure for so-called “hyperscalers” (the biggest technology firms) for AI, cloud and more general purpose computing, for $4.9 billion. The deal is a mix of cash and stock and includes what AMD describes as a contingent payment of up to $400 million if certain performance metrics are met.

The plan will be to incorporate ZT Systems’ computing infrastructure design business. AMD has already said it will look to sell ZT Systems’ data center infrastructure manufacturing business to “a strategic partner”. 

ZT Systems has been privately held since it was founded in 1994. It’s based out of New Jersey and has only one external raise disclosed, $850 million in debt in 2023, according to PitchBook data. It works closely big competitors in chips such as Nvidia and Intel, building solutions with both over the years. It covers areas such as server solution design for areas like compute, storage, GPU/accelerators, high performance compute, 5G and edge computing.

The deal will give AMD a deeper bench of expertise specifically around AI systems design involving not just silicon, but software and systems, the company said, which could help AMD sell  more of its chips and systems powered by its chips to customers overall. AMD says that it’s already invested, prior to this, some $1 billion in building out its bigger ecosystem.

There is a business need for that enhanced approach, too. As AI systems increase in complexity, one big priority for big tech companies building and operating them will be to increase the efficiency of their systems for the most compute-heavy aspects them, such as AI model training and inferencing when live data is run through those models. 

“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 in a statement. “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.”

ZT Systems does not disclose the names of its clients, but it appears to have increased its profile in more recent years for providing specialist support in some of the thorniest and most expensive aspects of designing AI computing architecture. 

Its CEO Frank Zhang will lead AMD’s manufacturing business and ZT Systems will become a part of AMD’s Data Center Solutions Business Group.

“We are excited to join AMD and together play an even larger role designing the AI infrastructure that is defining the future of computing,” said Zhang, CEO of ZT Systems, in a statement. “For almost 30 years we have evolved our business to become a leading provider of critical computing and storage infrastructure for the world’s largest cloud companies. AMD shares our vision for the important role our technology and our people play designing and building the computing infrastructure powering the largest data centers in the world.”

ZT President Doug Huang will lead the design and customer enablement teams, and both will report to AMD Executive Vice President and General Manager Forrest Norrod, the company said.

The deal is expected to close in the first half of 2025.