Advanced Micro Devices (AMD) finalized its $4.9 billion acquisition of ZT Systems, a leading designer of data center equipment for cloud computing and artificial intelligence, on March 31, 2025.
This strategic move, initially announced in August 2024, positions AMD to challenge Nvidia’s dominance in the rapidly expanding AI data center market.
By integrating ZT Systems’ expertise, AMD aims to offer comprehensive, open-source ecosystems for AI computing, contrasting with Nvidia’s proprietary “AI factory” model.
CEO Lisa Su emphasized the growing complexity of AI hardware integration, stating that providing end-to-end systems beyond just chips and software is critical to meeting customer needs.
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Strengthening Data Center Capabilities
The acquisition enhances AMD’s ability to serve major clients like Microsoft and Meta Platforms, offering alternatives to Nvidia’s chips and servers. ZT Systems, based in Secaucus, N.J., brings approximately 1,000 design engineers specializing in hardware and server design to AMD’s Data Center Solutions unit.
With over $10 billion in annual revenue at the time of the deal, ZT Systems bolsters AMD’s portfolio, following its 2022 acquisitions of Xilinx and Pensando, which strengthened its programmable-chip and networking capabilities. Recent industry data highlights the AI server market’s growth, projected to reach $430 billion by 2033, underscoring the timeliness of AMD’s expansion.
Did You Know?
AMD’s acquisition of ZT Systems is its largest since the $49 billion purchase of Xilinx in 2022, signaling its aggressive push into AI and data center markets.
Open-Source Strategy to Compete
Unlike Nvidia’s all-inclusive approach, AMD’s strategy focuses on flexibility. Su noted that AMD will not supply every component but aims to create an open ecosystem, allowing customers to customize their data center environments.
This approach aligns with current market trends favoring interoperable solutions, as enterprises seek to avoid vendor lock-in. Real-time insights indicate strong demand for such ecosystems, with 68% of IT leaders prioritizing open-source technologies for AI deployments in 2025.
Su highlighted that AI adoption remains in its “very early stages,” with compute needs surging “orders of magnitude” higher than last year, a sentiment echoed by Nvidia’s Jensen Huang.
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Divesting Manufacturing, Focusing on Design
As part of the deal, AMD is actively seeking buyers for ZT Systems’ manufacturing unit, aligning with its focus on design and innovation. This move allows AMD to streamline operations while leveraging ZT’s engineering talent to enhance its AI offerings.
The acquisition reflects broader industry shifts, as competitors like Intel and Broadcom also invest heavily in AI infrastructure. Analysts suggest the AI computing market is expansive enough to support multiple players, with global AI spending expected to surpass $300 billion in 2025.
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