Fresh off the heels of Nvidia’s failed purchase of semiconductor manufacturer Arm, Advanced Micro Devices (NASDAQ: AMD) decided to turn the screw even further on its rival by announcing its own landmark acquisition.
And what an acquisition it could turn out to be.
The chip race is heating up
AMD announced yesterday that it has finalized the acquisition of Xilinx Inc., creating a semiconductor-producing powerhouse. The deal was originally announced in October and was priced at $35 billion. However, the company’s rising stock price has sent the price of the purchase soaring too, with it now valued closer to $50 billion.
AMD CEO Lisa Su was quick to point out the complementary nature of both companies’ products, while potentially adding salt to the wounds of Nvidia’s failed purchase by citing AMD’s “focus in talking to the regulatory authorities across the world.”
Adding Xilinx to its arsenal allows AMD to intensify its efforts in areas such as data centers, 5G communications, and the automotive market. With a global chip shortage currently hammering these industries, the move comes at the perfect time. If AMD can cement itself as the go-to producer for chips, it could gain serious ground in its heated battle with Intel, a company currently struggling to meet demand.
Su also described the burgeoning cloud, edge, and intelligent devices market now accessible to the company, which is valued at $135 billion annually. Gaining a foothold in this while others are struggling to meet the demand of their current industries could pave the way for a highly profitable future.
AMD has seen firsthand the importance of semiconductors to almost every major modern industry. When all of these companies are currently pushed to their production limits, a decision to aggressively expand could push AMD to the very top of the pile.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.