AMD has purchased Xilinx, the semiconductor company that pioneered the first field-programmable gate array (FPGA) for US$35 billion, the biggest deal in the company’s history.
The deal was announced yesterday morning as an all-stock deal. AMD estimates the combined enterprise value to be around US$135 billion.
With the acquisition, AMD is aiming to use Xilinx’s FPGAs and adaptive SoCs products to better address cloud computing and data centre platforms. AMD’s press release on the deal described Xilinx’s products as “complementary” to AMD’s own GPUs and CPUs, as well as its semi-custom chip business.
FGPA is Xilinx’s core business. Its key products include the Virtex, Artix, Spartan and Kintex series of FPGAs, as well as the Zynq series of SoCs. The chips are designed for automotive, defence, and space exploration purposes.
The deal is expected to close by the end of 2021 and the two companies will remain as separate entities until closing.
AMD showed a strong quarter in its Q3 financial report released yesterday. It generated US$2.8 billion this quarter, a 45 per cent increase quarter-over-quarter and 56 per cent increase year over year. Gross margin remains flat at 44 per cent, but operating income is up an 160 per cent quarter-over-quarter and 151 per cent year-over-year.
The company had previously estimated a 20 per cent CAGR in February’s analyst day. In a Q3 financial call to investors yesterday, AMD chief executive officer Lisa Su said that AMD continues to strive for that target post-acquisition.
“Twenty per cent CAGR is the right target for the combined business,” said Su. “I think we feel very good about organic growth and we feel very good about the growth initiatives.”
In addition to boosted chips sales in the consumer segment, AMD generated US$1.13 billion in its enterprise, embedded systems, and semi-custom chips business, upping its revenue by 101 per cent quarter-over-quarter and 116 per cent year-over-year . The company attributed the increase to higher semi-custom product sales, increased EPYC server processor sales, and ramped SoC production for the next-gen gaming consoles.
“As we look forward from a data centre environment, I would say that the overall data center environment is actually good…we believe that the demand environment is good,” responded Su when questioned about her view on data centre processor demands. “I think data centre business continues to be very strategic and performs well for us.”
AMD’s performance painted a sharp contrast to Intel’s. As shown in Intel’s Q3 financial report, its Data Center Group declined by seven per cent year over year. Its Client Computing Group (CCG), Intel’s largest business segment, generated US$9.8 billion representing a four per cent increase quarter-over-quarter and a one per cent increase year-over-year. Intel CCG saw a 16 per cent increase in notebook revenue and 11 per cent increase in total PC volume, but the gain is offset by a 16 per cent decrease in desktop revenue as users transitioned from desktop to notebook, as well as increased demand for lower-end devices, which reduced the average selling price.