Advanced Micro Devices agreed to pay nearly $5 billion to ZT Systems, a designer of data-center equipment for cloud computing and artificial intelligence, bolstering the chip maker’s attack on Nvidia’s dominance in AI computation, The Wall Street Journal reported.

The deal, among AMD’s largest, is part of a push to offer a broader menu of chips, software and system designs to big data-center customers such as Microsoft and Facebook owner Meta Platforms, promising better performance through tight linkages between those products.

Secaucus, N.J.-based ZT Systems, which isn’t publicly traded, was founded in 1994. It designs and makes servers, server racks and other infrastructure that house and connect chips in the giant data centers that power artificial-intelligence systems such as ChatGPT.

AMD posted a press release titled: “AMD to Significantly Expand Data Centers AI Systems Capabilities with Acquisition of Hyperscale Solutions Provider ZD Systems”

Strategic acquisition to provide AMD with industry-leading systems to expertise to accelerate deployment of optimized rack-scale solutions addressing $400 billion data center AI accelerator opportunity in 2027 —

ZT Systems, a leading provider of AI and general purpose compute infrastructure for the world’s largest hyper scale providers, brings extensive AI systems expertise that complements AMD silicon and software capabilities.

Addition of world-class design and customer enablement teams to accelerate deployment of AMD AI rack scale system with cloud and enterprise customers.

AMD to seek strategic partner to acquire ZT System’s industry-leading manufacturing business.

Transaction expected to be accretive on a non-GAAP basis by the end of 2025…

Reuters reported AMD said on Monday it plans to acquire server maker ZT Systems for $4.9 billion as the company seeks to expand its portfolio of artificial intelligence chips and hardware and battle Nvidia.

AMD plans to pay for 75% of the ZT Systems acquisition with cash and the remainder in stock. The company had $5.34 billion in cash and short-term investments as of the second quarter.

The computing requirements for AI have dictated that tech companies string together thousands of chips in clusters to achieve the necessary amount of data crunching horsepower. Stringing together the vast numbers of chips has meant the makeup of whole server systems has become increasingly important, which is why AMD is acquiring ZT Systems.

The addition of ZT Systems engineers will allow AMD to more quickly test and roll out its latest AI graphics processing units (GPU’s) at the scale cloud computing giants such as Microsoft require said AMD CEO Lisa Su in an interview with Reuters.

In my opinion, it looks like AMD is ready to see if it can overtake Nvidia. It will be interesting to see if AMD can do that.