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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hehatemeXX - Tuesday, October 27, 2020 - linkWTF! They spent all the money they earned on a FPGA based company :(
They better hope they get into the datacenter FAST, or this will turn up to be the "buy" that ruined AMD.
jimjamjamie - Tuesday, October 27, 2020 - linkRelax. They are not spending any cash on this acquisition at all. Your RGB gaming computer parts are safe.
hehatemeXX - Tuesday, October 27, 2020 - linkI don't have any RGB. This is the stock that's being spent. Yes, it's causing them cash, as stock = cash at time. I'm a DC guy, and would have never have thought that anyone with a thought would have spent 10+B on a fpga company. There are many more flexible, smaller groups that are much cheaper and can come up with new features much quicker.
FreckledTrout - Tuesday, October 27, 2020 - linkNvidia owns Mellanox and it heavily uses Xilinx. So there is some leverage / power play going on. Plus lots of IP. Also I think we will see this play out as not just a data center move as nodes shrink and we move to TSMC's 2nm GAAFET process I'm expecting to see some APU's that look like shrunken more advanced HPC parts.
nathanddrews - Tuesday, October 27, 2020 - linkStill... 35 Instagrams is a lot.
Spunjji - Wednesday, October 28, 2020 - linkIs it, though? Instagram was a web 2.0 company with no profit-making mechanism when it was bought. Xilinx are a 36-year-old company that have their products in a huge number of devices, and an absolute treasure-trove of IP.
nathanddrews - Thursday, October 29, 2020 - linkYou're right, Facebook made a terrible mistake. They're basically bankrupt now.
Samus - Tuesday, October 27, 2020 - linkThat what surprises me about this. I wonder if this will be approved by regulators due to the likelihood of strong arming nVidia going forward.
gamoniac - Saturday, October 31, 2020 - linkNice one.
Kjella - Tuesday, October 27, 2020 - linkYou seem to be confused, for the investors stock = cash. For the company stock = ownership. They don't get more money if the stock goes up, they don't get less money if the stock goes down. An all-stock swap is AMD stockholders giving part ownership of AMD in exchange for part ownership in Xilinx. The business is the same with new owners.
Can it still be a bad deal for AMD? Sure, if Xilinx becomes a boat anchor dragging the whole company down. Or if they lose focus on their current business to pursue futile synergy products. But AMD spent $0 from their war chest to buy it, it was all through deluting ownership. Assuming the owners agree to that, of course.