After a few weeks of rumors, as well as a few years of hearsay, AMD embarked on a full acquisition of FPGA maker Xilinx. The deal involves an all-equity transaction, leveraging AMD’s share price to enable an equivalent of $ 143 per Xilinx share – current AMD shareholders will still own 74% of the combined company, while Xilinx shareholders will own 26%. The combined $ 135 billion entity will total 13,000 engineers and expand AMD’s total addressable market to $ 110 billion. The primary reasons for the acquisition are believed to lie in Xilinx’s adaptive computing solutions for the data center market.
Dr. Lisa Su, CEO of AMD
“Our acquisition of Xilinx marks the next step in our journey to make AMD the leader in high-performance computing and the partner of choice for the world’s largest and most important technology companies. This is truly a compelling combination that will create significant value for all stakeholders, including AMD and Xilinx shareholders, who will benefit from the future growth and growth potential of the combined company. The Xilinx team is one of the strongest in the industry and we are delighted to welcome them to the AMD family. By combining our world-class engineering teams and deep domain expertise, we will create an industry leader with the vision, talent and scale to define the future of high performance computing.
Victor Peng, CEO of Xilinx
“We are delighted to join the AMD family. Our common cultures of innovation, excellence and collaboration make it an ideal combination. Together, we will lead the new era of high performance and adaptive computing. Our leading FPGAs, Adaptive SoCs, Accelerators and SmartNIC solutions enable innovation from the cloud, to peripheral devices and terminals. We enable our customers to deploy differentiated platforms to market faster, with peak efficiency and performance. Our association with AMD will help accelerate the growth of our data center business and allow us to develop a broader customer base in more markets. “
As part of the acquisition, Victor Peng will join AMD as chairman responsible for the Xilinx business, and at least two Xilinx directors will join AMD’s board at closing.
Part of activating the acquisition is that AMD is leveraging its approximately $ 100 billion market capitalization, and much of the industry will draw parallels with Intel’s acquisition of FPGA maker Altera. in December 2015 for $ 16.7 billion. High-performance FPGA markets, along with SmartNICs, adaptive SoCs, and other controllable logic, naturally reside more than most other markets in the data center markets. With AMD’s recent growth in the enterprise space with its Zen-based EPYC processor lines, a natural evolution one could conclude would be the synergy of high performance computing with adaptable logic under one roof, which is precisely the conclusion Intel also came to several years ago. AMD announced last quarter that it had surpassed the 10% market share in Enterprise with its EPYC product lines, and today’s earnings call is also expected to grow. AMD is already reporting company-wide revenue growth of + 56% year-over-year, with + 116% in the Enterprise, Embedded and Semi-Custom markets.
The press release says AMD expects to save $ 300 million in synergistic operational efficiency within 18 months of closing, through the rationalization of shared infrastructure. The transaction has been approved unanimously by both groups of directors and is subject to the approval of both groups of shareholders. The transaction is expected to close by the end of calendar year 2021.
AMD shares are currently down 5% before the market opens. A conference call will be held at 8 a.m. ET to discuss AMD’s third quarter financial results and acquisition plans.
AMD’s key product lines include its Zen processor lines such as Ryzen and EPYC, its graphics division for Radeon and Radeon Instinct, and its semi-custom and integrated division which has developed the latest generation of console processors for Sony and Microsoft.
Xilinx recently entered the market with its Versal Alveo adaptive SoCs, built as programmable logic combined with hardened compute logic and specialized coprocessors and accelerators. Its FPGA families include Spartan, Zynq, Artix, Kintex, Virtex and Virtex Ultrascale, used in a wide variety of commercial, embedded and enterprise markets, including the hardware used to design the processors of the future.
Source: Press release