AMD and Xilinx: Pandemic disruptions fuel another mega-chip deal

Joanna Estrada
October 28, 2020

Advanced Micro Devices is buying Xilinx for $35bn in an all-stock deal that will combine the two Silicon Valley chip-makers and accelerate an already rapid-fire pace of mergers and buyouts in the industry.

AMD, based in Santa Clara, Calif., announced the deal Tuesday morning at the same time the chipmaker released its third-quarter earnings results, where the company reported a $2.8 billion in quarterly revenue that quarter, marking a 56 percent year-over-year increase.

Xilinx makes a class of programmable computer chip called an FPGA.

The combination of the two California-based companies is expected to intensify competition in the lucrative market for chips used in data centers, an area long dominated by Intel, the biggest USA semiconductor company by revenue. Its shares jumped almost 6% in premarket trading Tuesday following news of Xilinx's deal.

AMD and Xilinx have announced they have entered into a definitive agreement for the former to acquire the latter in an all-stock transaction valued at US$35 billion.

When the Wall Street Journal broke the news earlier this month that AMD was pursuing a Xilinx acquisition, the newspaper noted that wireless carriers are using FPGAs as they expand their 5G network infrastructure.

When all is said and done, AMD "will offer the industry's strongest portfolio of high performance processor technologies", including CPUs, GPUs, FGPAs, Adaptive SoCs and software expertise.

That said, it could stay take a while for the deal to be completed - AMD doesn't expect it to happen until close to the end of 2021.

AMD said that by joining forces it will create the "industry's leading high-performance computing company", tapping into growth segments such as data centres, gaming, automotive, industrial, aerospace and defence. Peng will join AMD as president, responsible for the Xilinx business and strategic growth initiatives. It still needs approval from shareholders of both companies.

AMD shares were down more than 4% on Tuesday, while Xilinx jumped more than 8%.

Other reports by Click Lancashire

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