AMD in $35 Billion All-Stock Acquisition of Xilinxby Dr. Ian Cutress on October 27, 2020 6:53 AM EST
After a couple of weeks of rumor, as well as a couple of years of hearsay, AMD has gone feet first into a full acquisition of FPGA manufacturer Xilinx. The deal involves an all-stock transaction, leveraging AMD’s sizeable share price in order to enable an equivalent $143 per Xilinx share – current AMD stockholders will still own 74% of the combined company, while Xilinx stockholders will own 26%. The combined $135 billion entity will total 13000 engineers, and expand AMD’s total addressable market to $110 Billion. It is believed that the key reasons for the acquisition lie in Xilinx’s adaptive computing solutions for the data center market.
AMD CEO Dr. Lisa Su
“Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world. 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 upside potential of the combined company. The Xilinx team is one of the strongest in the industry and we are thrilled 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.”
Xilinx CEO Victor Peng
“We are excited to join the AMD family. Our shared cultures of innovation, excellence and collaboration make this an ideal combination. Together, we will lead the new era of high performance and adaptive computing. Our leading FPGAs, Adaptive SoCs, accelerator and SmartNIC solutions enable innovation from the cloud, to the edge and end devices. We empower our customers to deploy differentiated platforms to market faster, and with optimal efficiency and performance. Joining together with AMD will help accelerate growth in our data center business and enable us to pursue a broader customer base across more markets.”
As part of the acquisition, Victor Peng will join AMD as president responsible for the Xilinx business, and at least two Xilinx directors will join the AMD Board of Directors upon closing.
Part of the enablement of the acquisition is AMD leveraging its market capitalization of ~$100 billion, and a lot of the industry will draw parallels of Intel’s acquisition of FPGA-manufacturer Altera in December 2015 for $16.7 billion. The high-performance FPGA markets, as well as SmartNICs, adaptive SoCs, and other controllable logic, reside naturally in the data center markets more than most other markets. With AMD’s recent growth in the enterprise space with its Zen-based EPYC processor lines, a natural evolution one might conclude would be synergizing high-performance compute with adaptable logic under one roof, which is precisely the conclusion that Intel also came to several years ago. AMD reported last quarter that it had broken above the 10% market share in Enterprise with its EPYC product lines, and today’s earnings call is also expected to see growth. AMD is already reporting revenue up +56% year on year company-wide, with +116% in the Enterprise, Embedded, and Semi-Custom markets.
The press release states that AMD expects to save $300m in synergistic operational efficiencies within 18 months of closing, due to streamlining shared infrastructure. The deal has been unanimously approved by both sets of directors, and is subject to approval of both sets 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 8am ET to discuss AMD’s Third Quarter Financial results and acquisition plans.
AMD's key product lines includes its Zen based processor lines such as Ryzen and EPYC, its Graphics division for Radeon and Radeon Instinct, and its semi-custom and embedded division which has been developing the latest generation of console processors for both Sony and Microsoft.
Xilinx recently entered the market with its Versal Alveo Adaptive SoCs, built as combination programmable logic plus hardened compute logic and specialized co-processors 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 processors of the future.
Source: Press Release
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poohbear - Tuesday, October 27, 2020 - linkDude, you act like you saved AMD from bankruptcy and not Lisa Su. Just chill, she knows what she's doing.
Hifihedgehog - Tuesday, October 27, 2020 - linkSo thinks the gamers who dropped a couple thou on a gaming PC. Reality check: your gaming PC is a teeny tiny H20 molecule in the whole profit swimming pool.
Spunjji - Wednesday, October 28, 2020 - linkAmazing how strong the opinions of the wilfully ignorant can be.
michaellpl - Tuesday, October 27, 2020 - linkcome on its a different company, i used to work in AMD around ATI acquisition (left in 2007). I know a lot of people who would like to get into AMD now as opposed to exodus which lasted for the last decade. Pivoting into services can take a long time, look at microsoft. Now most of their revenue is from 365/azure but it took them almost a decade to get there.
Spunjji - Wednesday, October 28, 2020 - linkIs that still the case now? I'd certainly heard bad things from around the time of the acquisition - AMD's management were notoriously terrible now - but I've had no insight into how things have been since Lisa Su took over.
jtd871 - Tuesday, October 27, 2020 - linkInteresting that the market and the comments here are reacting somewhat negatively to this news, especially when we know that AMD have been making smart bets over the past several years to get where they are today. I'm inclined to give AMD the benefit of the doubt on knowing what they are doing with Xilinx.
Railander - Tuesday, October 27, 2020 - linkthe thing is, what exactly are they getting out of this acquisition? what benefits would FPGAs provide them?
i don't need to make this question in regards to nvidia acquiring mellanox, both their current and future market seems clear as day and they will continue to grow with innovative products, and the synergy between high networking interconnects and GPUs couldn't be more obvious if you've ever seen any datacenter. and with mellanox at hands, their acquisition of cumulus again makes a lot of sense.
what exactly is AMD getting out of an FPGA acquisition? i just don't see anything useful here.
jamesindevon - Tuesday, October 27, 2020 - linkI do wonder how useful FPGAs with Infinity Fabric on them would be. Presumably chiplets would be just as useful for FPGAs as they are in the CPU business. Apart from anything else, it should enable larger devices than you could get with monolithic dies.
And once they've got that, they should be able to replace any of the Zen chiplets in Epyc with FPGA chiplets (at packaging time -- no new silicon!) giving you high performance CPU cores with a very fast connection to however many FPGAs the customer wants.
I'm sure there is a market for that.
cb88 - Tuesday, October 27, 2020 - linkXilinx has already been doing chiplets on interposers for > 3 FPGA generations... its not it should enable, it DOES enable and has done for years now!
SaberKOG91 - Tuesday, October 27, 2020 - linkXilinx has a huge portfolio of IP. Not just FPGAs, but also the things you synthesize on FPGAs. That's really useful stuff like Ethernet controllers (100Gb), DDR/HBM memory controllers, Software-Defined-Radio, Crypto accelerators, PCI-E PHYs, etc. Then there's the IP related to their SoCs: ARM CPUs and GPUs, specialized interconnects, DSPs, interposer tech, etc.
Let's also not forget that Xilinx has very competitive accelerator cards that are seeing wider industry adoption as we hit the limits of CPU/GPU computation.