AMD agrees to buy rival Xilinx in $35-billion deal to take on Intel

Semiconductor designer Advanced Micro Devices (AMD) on Tuesday said it has agreed buy Xilinx in a $35 billion all-stock deal that will intensify its battle with Intel Corp in the data center chip market.
 

The deal, which AMD expects to close at the end of 2021, would create a combined firm with 13,000 engineers and a completely outsourced manufacturing strategy that relies heavily on Taiwan Semiconductor Manufacturing Co Ltd (TSMC).
 

Deal will broaden AMD's business into chips for 5G market, automotive electronics The two US firms have benefited from a more nimble approach to grab market share from Intel, which has struggled with internal manufacturing.
 

AMD has long been Intel's chief rival for central processor units (CPUs) in the personal computer business. Since Chief Executive Lisa Su took over AMD in 2014, she has focused on challenging Intel in the fast-growing business of data centers that power internet-based applications and services and are fuelling the rise of artificial intelligence and fifth-generation telecommunications networks. Xilinx has also been working to penetrate data centers with programmable processors that help speed up specialized tasks such as compressing videos or providing digital encryption. Its primary rival in the area, Altera Corp, was scooped up by Intel for $16.7 billion in 2015 in what was then Intel's largest-ever deal.

 

"There are some areas where we're very strong, and we will be able to accelerate some of the adoption of the Xilinx product family," Su told Reuters in an interview. "And there are some areas where (Xilinx CEO) Victor (Peng) is very strong, and we believe that we'll be able to accelerate some of the AMD products into those markets."
 

The tie-up comes at a time when Intel's manufacturing technology has fallen years behind TSMC’s. AMD, which spun off its factories nearly a decade ago, has rocketed ahead of Intel with chips that perform better. The performance edge helped AMD gain its best market share since 2013 at slightly less than 20 per cent of the CPU market, which has in turn pushed its shares up 68 per cent this year.