With rival Nvidia's AI business growing rapidly, silicon giant AMD has added a giant AI systems maker to its arsenal by signing a deal to acquire ZT Systems for about $49 billion in cash and stock

This is not only because it is literally a big deal at about $5 billion, but also because it will have a huge impact on AMD's business at both the enterprise and consumer levels

ZT Systems is best known for supplying hardware for cloud computing servers to companies like Microsoft, but AMD did not acquire the company solely to strengthen its data center business According to AMD CEO Dr Lisa Su, the acquisition of ZT Systems is also intended to accelerate GPU development and sell more GPUs to customers

“The main way [ZT Systems] will be positive for the company is that we will sell more GPUs,” AMD CEO Lisa Su (pictured) told Reuters in an interview about the deal

As graphics cards and the processors that drive them become more important in powering the PC racks that run the latest AI services, AMD is clearly looking to improve its ability to develop and ship AI-optimized chips [This includes everything from the new Ryzen AI 300 Copilot+ PC CPU we saw at Computex 2024 to the AMD Instinct MI300 accelerator the company is selling to AI businesses AMD counts companies such as Meta and Microsoft as customers for its systems, and its CEO, Dr Suh, told Reuters that “AI systems are our top strategic priority”

According to a conference call for investors on the deal, AMD will add approximately 1,000 engineers and 1,500 manufacturing employees as part of the deal These teams will work alongside AMD's existing engineers to develop AI-optimized chips and systems more quickly and efficiently

“It will help accelerate AMD at large,” Dr Suh said in response to a question

However, AMD plans to spin off and sell at least a significant portion of ZT Systems' data center manufacturing business

The deal is not expected to be completed until 2025 and will not affect the average AMD user in the near future However, the deal is significant in the AI arms race between companies like AMD, Intel, and Nvidia because it shows exactly how highly companies like AMD, Intel, and Nvidia value AI and cloud computing companies as customers AMD is a major player in the AI arms race between companies like AMD, Intel and Nvidia [By acquiring ZT Systems, AMD is acquiring an enterprise system provider like Microsoft and intends to work with those joining from ZT to accelerate the development of enterprise-scale chips and improve the services it provides to customers who need complex servers and systems and put their own teams to work

This is happening as AI technology continues to advance at a rapid pace We can now create realistic AI videos in seconds and generate AI character voices But while we seem to be calling these tricks out of thin air, they actually require serious horsepower from a computer on a remote server somewhere [And those wondering whether to buy AMD or Nvidia for their next gaming PC GPU upgrade may not have to worry about this deal right away, but who knows?