AMD to buy rival chipmaker Xilinx for $35 billion in its efforts to challenge Intel in the data center chip market

In early October, we wrote about Advanced Micro Devices (AMD) after the Semiconductor designer was reportedly in advanced talks to buy rival chipmaker Xilinx for over $30 billion. This morning, AMD announced it would buy Xilinx in a $35 billion all-stock deal, intensifying its battle with Intel Corp in the data center chip market, according to a report from Reuters.

The acquisition, which AMD expects to close at the end of 2021, will create a combined company with 13,000 engineers and a completely outsourced manufacturing strategy that relies heavily on Taiwan Semiconductor Manufacturing. The two U.S. companies have benefited from a more nimble approach to grab market share from Intel, which has struggled with internal manufacturing. AMD has long been Intel’s chief rival for central processor units (CPUs) in the personal computer business.

The San Francisco-based Xilinx makes programmable chips used in data centers to speed up tasks such as artificial intelligence work and in 5G telecommunications base stations. Its solutions include advanced integrated circuits, software design tools, predefined system functions are delivered as intellectual property cores, design services, customer training, field engineering, and technical support services. The company’s programmable logic devices include field-programmable gate arrays and complex programmable logic devices that customers program to perform desired logic functions.

Xilinx’s products are used by electronic equipment manufacturers in industrial, consumer, automotive, and data processing markets. It also provides Xilinx ISE, an integrated software environment, integrates with a range of third-party electronic design automation software offerings; solutions for the areas of DSP and embedded processing for solving system-level problems of non-traditional users, such as system architects and software engineers; programmable and in-system programmable storage devices to configure Xilinx FPGAs; and education, design, and support services.

Since Chief Executive Lisa Su took over AMD in 2014, she has focused on challenging Intel in the fast-growing business of data centers that power internet-based applications and services and are fueling the rise of artificial intelligence and fifth-generation telecommunications networks.

Xilinx has also been working to penetrate data centers with programmable processors that help speed up specialized tasks such as compressing videos or providing digital encryption. Its primary rival in the area, Altera Corp, was scooped up by Intel for $16.7 billion in 2015 in what was then Intel’s largest-ever deal.

“There are some areas where we’re very strong, and we will be able to accelerate some of the adoption of the Xilinx product family,” Su told Reuters in an interview. “And there are some areas where (Xilinx CEO) Victor (Peng) is very strong, and we believe that we’ll be able to accelerate some of the AMD products into those markets.”