Computer-chip designer AMD will buy industry peer Xilinx in a $35 billion all-stock deal, the companies announced Tuesday.
The blockbuster acquisition will unite two leading developers of semiconductors and further ramp up AMD’s bid to challenge Silicon Valley titan Intel, particularly in the rapidly growing data center business.
“Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world,” AMD president and CEO Lisa Su said in a statement.
Both AMD and Xilinx develop processors that are used in devices such as computers, gaming systems and data centers that power internet-based services and applications. The companies rely on manufacturing partners — namely Taiwan Semiconductor Manufacturing Co., or TSMC — to make their products.
The acquisition, expected to close by the end of next year, will create a combined semiconductor giant with 13,000 engineers and more than $2.7 billion in annual research and development investment, the California-based companies said.
The terms of the deal will give Xilinx stockholders about 1.7 AMD shares for each of their Xilinx shares. AMD’s stockholders will own about 74 percent of the combined company, while Xilinx shareholders will control the other 26 percent, according to a news release.
News of the tie-up sent Xilinx’s stock price nearly 10 percent in premarket trading to $125.96 as of 7:12 a.m. Tuesday, while AMD’s shares fell 4.4 percent to $78.58.
The deal comes as AMD snaps up a greater share of the market from Intel, which still manufactures its own chips but has struggled to match the quality of those produced by TSMC. AMD’s better-performing products have helped it capture nearly 20 percent of the market for central processor units, which has driven its stock price up 68 percent this year as of Monday.
For Xilinx’s part, president and CEO Victor Peng said the deal will help speed up the growth of its data center business and “enable us to pursue a broader customer base across more markets.” He’ll be a president in charge of the Xilinx business at the combined company, which Su will lead as CEO.
“Our shared cultures of innovation, excellence and collaboration make this an ideal combination,” Peng said in a statement.
With Post wires
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