Advanced Micro Devices, Inc. (NASDAQ:AMD) has moved to strengthen its competitive edge as competition in the semiconductor industry heats up. The company is reportedly in advanced talks to buy Xilinx in a deal worth $30 billion.
Xilinx Acquisition
The acquisition push comes at a time of growing demand for chips, given the global shift to working from home. AMD is one of the companies that has seen a significant surge in demand for its chips prompting it to move and safeguard its edge amid stiff competition from the likes of NVIDIA Corporation (NASDAQ:NVDA) and Intel Corporation (NASDAQ: INTC).
Xilinx would be a perfect fit for AMD as it boasts of a robust network for making chips used in data centers to speed up tasks such as artificial intelligence work. The San-Jose based company also makes chips that are being used to fuel the 5G revolution.
Xilinx is reportedly open for a deal after suffering a big blow over the past year on its key customer Huawei technologies being blacklisted from operating in the U.S. The company’s customer base has shrunk significantly in the aftermath of the U.S blacklisting a number of Chinese companies in what is turning out to be a vicious tech war.
Focus on Data Centers
AMD succeeding in acquiring Xilinx would be a major coup in the fight for market share in the data center business. Nvidia is already planning to acquire British chip designer Arm in a $40 billion deal. The two are looking to dethrone Intel, which has been a market leader in powering data centers.
Xilinx stands to give AMD an arsenal of products to compete against Intel's FPGA solution gained through Altera's acquisition in 2015. Likewise, AMD would be better positioned to compete against Nvidia’s Alveo accelerator cards, becoming a common phenomenon in the data center business.
AMD has become a key player in the data center business thanks to its arsenal of data center chips led by second-generation EPYC processor. Similarly, the company has accrued double-digit share in the X86 server market against fierce rival Intel.