Talk of deal for FPGA maker comes after Nvidia said it will buy Arm for $40 billion as chip market consolidates
AMD reportedly is nearing a deal to buy programmable chip maker Xilinx for $30 billion in a move that would make it a stronger competitor to rival Intel in the data center.
The Lowdown: The planned acquisition, first reported this week by The Wall Street Journal, also would mark the latest shift in a processor market that continues to consolidate.
The Details: According to the report, AMD is looking to flex its new financial muscle that has been built up during 2020 as the COVID-19 pandemic – and the remote working and social distancing it has forced – has fueled rapid growth in such markets as PCs and gaming consoles like Microsoft’s Xbox and Sony’s PlayStation. AMD’s market value has blown past $100 billion, while second-quarter revenue ($1.93 billion, a 26% jump) and net income ($157 million, four times that of a year ago) both surged.
Xilinx, which makes field-programmable gate arrays (FPGAs), is valued at $26 billion.
AMD spent more than a decade somewhat adrift as Intel hardened its dominant share – more than 95% – of the server chip market, but has rebounded over the past three years with the introduction of its Zen microarchitecture (this week it unveiled its Zen 3 architecture) and EPYC processors. It also has its Radeon GPU business and adding Xilinx’s FPGAs would give it another tool to address the massive changes underway in data centers.
Unlike CPUs, FPGAs can be reprogrammed via software, so their capabilities can adapt to changing demands, such as emerging technologies like artificial intelligence (AI), machine learning, analytics, and automation and growing compute environments like the cloud and edge. They also can be used as accelerators, complementing CPUs to help drive system performance while keeping a lid on power consumption.
Xilinx’s chips are used in a broad array of areas, from wireless communications like 5G and data centers to cars. Intel became a player in the FPGA space when it bought Altera in 2015 for $16.7 billion.
The Impact: An AMD deal to buy Xilinx would be the latest proposed acquisition to shake the market. Nvidia last month announced its intention to buy Arm for $40 billion in a move that would bring a CPU element to the GPU maker. Arm, which dominates the mobile chip space, for a decade has promoted its low-power CPU designs for the data center and now is beginning to make some inroads, with chip manufacturers like Marvell and Ampere levering its architecture and major tech companies like Amazon Web Services (AWS) in its Graviton processors and Fujitsu with its A64FX, a chip powering Fugaku, which sits atop the Top500 list of the world’s fastest computers.
Arm also has expanded it reach into such areas as the Internet of Things (IoT), autonomous vehicles, and AI.
The changes roiling the data center chip market also are giving enterprises and channel partners something they’ve been looking for for years: viable alternatives to Intel’s x86 processors that will help drive innovation and keep prices down.