In what looks to be a blockbuster deal, microprocessor manufacturer AMD looks to be moving to buy rival chipmaker Xilinx for a whopping $30 billion.
As first reported by the Wall Street Journal, AMD is in “advanced talks” to acquire Xilinx in a similar fashion as to NVIDIA’s $40 billion purchase of ARM which was also reported by WSJ last month.
Analysts see the acquisition as part of a ploy to further strengthen AMD in its rivalry against tech giants Intel and NVIDIA. Both are still seen as the top dogs in the CPU and GPU markets, respectively. AMD, however, has been closely nipping at the heels of both companies thanks to the success of both Ryzen and Radeon chips.
According to Bloomberg, the rumored deal can potentially widen AMD’s capabilities to upgrade its CPU and GPU architectures towards for advanced Artificial intelligence and networking applications.
“AMD’s interest in Xilinx is both a shield and a sword against Intel’s diverse data-center computing assets, Nvidia’s GPUs, Mellanox’s assets and its potential purchase of U.K.-based Arm,” reads analysis from Bloomberg intelligence’s Anand Srinivasan and Marina Gigis.
“Xilinx’s FPGAs would expand AMD’s computing variety, widening its CPU and GPU capability into AI and networking,” the report adds. “The deal may also be financially accretive.”
On the other hand, an analyst at the EE Times has made mention of the deal being very unusual. They cite how AMD CEO Lisa Su had generally been “conservative” of business deals after having survived near-bankruptcy during the early 2010s. The $30 billion acquisition, which is around one-third of AMD market capitalization, will potentially force the chipmaker to “to issue additional stock and acquire significant debt” in the event that itl pushes through.
Under Su’s stewardship, AMD has seen a near-miraculous resurgence after $7 billion net loss and near-bankruptcy plagued the company during the early 2010s. Since then, it has seen its shares go up by more than 1,300 percent despite the ongoing U.S.-China trade war as well as the ongoing COVID-19 pandemic.
AMD’s architecture and philosophy of keeping costs relatively low compared to its rivals while offering similar performance to its counterpart has paid dividences.
The California-based Xilinx, on the other hand, made its name through its pioneering work Field Programmable Gate Arrays (FPGA), programmable Systems on Chip (SOC) and Adaptive Compute Acceleration Platforms (ACAP) which aim to vastly improve on systems used in Data Center technologies and 5G Telecommunication networks.
It is worth noting, however, Xilinx suffered due to the U.S.’s ban on Huawei products that started last year. As part of the ban, Huawei—one of Xilnix’s clients—was banned from purchasing chips and components from U.S. Companies including Xilinx. The ban remains in effect until May 2021.
As for the company’s purchase, neither Xinlinx or AMD have released anything as of press time.