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.”

Details

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.

Portfolio

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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  • WaltC - Tuesday, October 27, 2020 - link

    Great move, AMD...nice...;) AMD is moving ahead quickly! Reply
  • Spunjji - Wednesday, October 28, 2020 - link

    "but they balked at nvidia buying /a company/" - not just any old company! This is that low-information troll strategy of comparing different things and pretending they're the same, and as a result this is a stale, musty, cold-ass take.

    Nvidia are being scrutinised because they will be buying a market-defining company that deals directly with many of their competitors. They also have a track record of using acquisitions in an anti-competitive fashion. People aren't "balking" at AMD because none of those things apply here.
    Reply
  • TomWomack - Tuesday, October 27, 2020 - link

    I know that hardware companies tend to buy a lot of big FPGAs to run simulations of next-generation chips, but I hadn't thought it was a large enough line item to get "$300m in synergistic operational efficiencies"; Xilinx hasn't got a reputation for gold-plated executives and implausibly lax procurement.

    The problem is that large chip designs have to be split across lots of FPGAs, and getting signals across the gap within the cycle means you can't use all the clever transceivers which introduce lots of delay; you end up very limited by pinout and running the design embarrassingly slowly. Particularly embarrassing if your cache is based on fancy multi-ported RAM macros and you have to use several RAM blocks and a ton of logic to implement them.
    Reply
  • sing_electric - Wednesday, October 28, 2020 - link

    $300m is a lot and you don't get that by having employees move into smaller cubicles - my bet is that what they actually mean is that between the two companies, they expect that they'll be able to save money when negotiating prices for things that both AMD and Xilinx use, and probably save on licensing fees - there's a really good chance that both companies pay out for parts of the chiplet tech they've both started using, and they might be able to only pay one license fee going forward. Reply
  • Roy2002 - Tuesday, October 27, 2020 - link

    Somehow this reminds me the ATI purchase, overpriced! Reply
  • Yojimbo - Tuesday, October 27, 2020 - link

    It's not overpriced. It is an all-stock acquisition. AMD is trading at nose-bleed forward-looking earnings levels. Therefore there is risk in AMD's currency price (their share price) at these levels. Therefore AMD needed to pay a premium for an all-stock deal. Reply
  • sing_electric - Wednesday, October 28, 2020 - link

    I mean, Xilinx is also trading at a pretty elevated price with a P/E ratio nearing 50 (though that's got nothing on AMD).

    Truth be told, I think in a way AMD (And Dr. Su to some extent) are in the position of being a victim of the company's recent success: The share price today probably bakes in continued success of Zen in desktop, laptop and enterprise and a certain expectation that they'll be able to claw back some market share from Nvidia on the GPU side.

    Since significant growth is already baked-in to the share price, for FURTHER growth Su and Co. need to pull another rabbit out of a hat, which means taking some kind of a gamble into new markets. By far, the fastest (and most certain) way to do that is an acquisition.
    Reply
  • zodiacfml - Tuesday, October 27, 2020 - link

    What is going on though with Intel/Altera and AMD/Xilinx? It seems like they're going to war. What are they fighting over? Reply
  • Spunjji - Wednesday, October 28, 2020 - link

    The future of computing..? Reply
  • JCB994 - Wednesday, October 28, 2020 - link

    Where have you been for the last 30 years? Reply

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