AMD has closed the largest chip deal in the industry’s long history, bringing Xilinx under its corporate umbrella early Monday.
For AMD the deal is transformational, adding new adaptive computing technology Xilinx has developed and its programmable processors to the company’s product portfolio. But acquiring Xilinx was also a necessity for AMD, as it continues to fight for market share in the data center against a weakened — but still dominant — Intel and the intensely competitive Nvidia.
Success in the semiconductor industry has increasingly become a function of size. Improvements in chips depend on ever-shrinking features and squeezing more onto a piece of silicon. On the flip side, the costs associated with innovation in chip design and manufacturing have become so onerous that the businesses have been consolidating out of necessity in recent years. For example, the cost of designing a new chip using the latest manufacturing method can exceed $500 million.
After Monday, AMD will boast 15,000 engineers, and has said that with Xilinx, it will significantly expand the scale of its research and development capabilities. AMD says that the combined market size of AMD-Xilinx will be roughly $135 billion in 2023. Xilinx will become the Embedded Computing Group inside AMD, and will be led by Xilinx’s CEO, Victor Peng.
AMD’s success comes days after Nvidia’s troubled $40 billion bid for Arm collapsed amid regulatory pressure. Now, Arm must go it alone, as SoftBank says it plans to take the company public.
The all-stock AMD-Xilinx deal was worth $35 billion when the company announced its plans in 2020. But the change in AMD’s stock price since brings the deal price to nearly $50 billion.
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