AMD buys rival chipmaker Xilinx for nearly $50 billion, making it one of the largest deals in the semiconductor industry

Late last year, semiconductor giant Advanced Micro Devices (AMD) announced its to buy rival chipmaker Xilinx for $35 billion in an all-stock deal as part of its efforts to challenge Intel in the data center chip market.

Today, AMD announced it has finalized the purchase of Xilinx in a record chip industry deal valued at about $50 billion, Reuters reported. The acquisition 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 deal was originally valued at $35 billion as we first reported back in October 2020, but the rise of AMD’s stock value has pushed up the price tag, AMD said. The announcement comes on the heels of Nvidia Corp’s decision to abandon its plans to buy SoftBank-owned Arm Ltd, citing regulatory hurdles.

In an interview, AMD Chief Executive Officer Lisa Su told Reuters that, between AMD’s processor technologies and Xilinx’s system on chips and field-programmable chips, the two businesses are complementary. “That was our focus in talking to the regulatory authorities across the world,” Su said. She added that Arm was an important partner for AMD but declined to say more about Arm’s possible next steps.

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.