AMD in $35 Billion All-Stock Acquisition of Xilinxby Dr. Ian Cutress on October 27, 2020 6:53 AM EST
After a couple of weeks of rumor, as well as a couple of years of hearsay, AMD has gone feet first into a full acquisition of FPGA manufacturer Xilinx. The deal involves an all-stock transaction, leveraging AMD’s sizeable share price in order to enable an equivalent $143 per Xilinx share – current AMD stockholders will still own 74% of the combined company, while Xilinx stockholders will own 26%. The combined $135 billion entity will total 13000 engineers, and expand AMD’s total addressable market to $110 Billion. It is believed that the key reasons for the acquisition lie in Xilinx’s adaptive computing solutions for the data center market.
AMD CEO Dr. Lisa Su
“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. This is truly a compelling combination that will create significant value for all stakeholders, including AMD and Xilinx shareholders who will benefit from the future growth and upside potential of the combined company. The Xilinx team is one of the strongest in the industry and we are thrilled to welcome them to the AMD family. By combining our world-class engineering teams and deep domain expertise, we will create an industry leader with the vision, talent and scale to define the future of high performance computing.”
Xilinx CEO Victor Peng
“We are excited to join the AMD family. Our shared cultures of innovation, excellence and collaboration make this an ideal combination. Together, we will lead the new era of high performance and adaptive computing. Our leading FPGAs, Adaptive SoCs, accelerator and SmartNIC solutions enable innovation from the cloud, to the edge and end devices. We empower our customers to deploy differentiated platforms to market faster, and with optimal efficiency and performance. Joining together with AMD will help accelerate growth in our data center business and enable us to pursue a broader customer base across more markets.”
As part of the acquisition, Victor Peng will join AMD as president responsible for the Xilinx business, and at least two Xilinx directors will join the AMD Board of Directors upon closing.
Part of the enablement of the acquisition is AMD leveraging its market capitalization of ~$100 billion, and a lot of the industry will draw parallels of Intel’s acquisition of FPGA-manufacturer Altera in December 2015 for $16.7 billion. The high-performance FPGA markets, as well as SmartNICs, adaptive SoCs, and other controllable logic, reside naturally in the data center markets more than most other markets. With AMD’s recent growth in the enterprise space with its Zen-based EPYC processor lines, a natural evolution one might conclude would be synergizing high-performance compute with adaptable logic under one roof, which is precisely the conclusion that Intel also came to several years ago. AMD reported last quarter that it had broken above the 10% market share in Enterprise with its EPYC product lines, and today’s earnings call is also expected to see growth. AMD is already reporting revenue up +56% year on year company-wide, with +116% in the Enterprise, Embedded, and Semi-Custom markets.
The press release states that AMD expects to save $300m in synergistic operational efficiencies within 18 months of closing, due to streamlining shared infrastructure. The deal has been unanimously approved by both sets of directors, and is subject to approval of both sets of shareholders. The transaction is expected to close by the end of Calendar Year 2021.
AMD shares are currently down 5% before the market opens. A conference call will be held at 8am ET to discuss AMD’s Third Quarter Financial results and acquisition plans.
AMD's key product lines includes its Zen based processor lines such as Ryzen and EPYC, its Graphics division for Radeon and Radeon Instinct, and its semi-custom and embedded division which has been developing the latest generation of console processors for both Sony and Microsoft.
Xilinx recently entered the market with its Versal Alveo Adaptive SoCs, built as combination programmable logic plus hardened compute logic and specialized co-processors and accelerators. Its FPGA families include Spartan, Zynq, Artix, Kintex, Virtex, and Virtex Ultrascale, used in a wide variety of commercial, embedded, and enterprise markets, including the hardware used to design processors of the future.
Source: Press Release
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Spunjji - Wednesday, October 28, 2020 - linkIt's just a semi-literate rant though. Sure, it contains numbers - but they're not *useful* numbers.
ZugZug7 - Tuesday, October 27, 2020 - linkI really don't think AMD went into the bargain basement by choice, many of us still remember high priced consumer Athlon 64s back around 2005. AMD has not been in a position to charge more while its cpus were underperforming the competition. Pricing about Intel for 3 years?? 3 years ago they barely sold what they had at low prices. They've really only reached parity up until now, and have strong brand recognition and loyalty to fight against to boot. I think in Q4 when we finally see a strong performance advantage (for the first time in over a decade) we will see prices and margins increasing again.
As far Intel goes, you seem very optimistic they will be able to deliver a 14nm part with high core counts that is as fast as 7nm+ TSMC and fits in servers and laptops without overheating. On top, Intel has been missing deadlines since finance expert (read: not a technologist) Bob Swan took over years ago. Swan inherited a huge tech lead, and has optimized Intel for the bottom line given their position. I would not be surprised he is behind Intel's aversion to expensive UV lithography development, which Intel has sadly proven /two nodes in a row/ (oh 10nm barely worked with pre-UV? How about you try at 7nm then?? XD) is absolutely necessary beyond 14nm. Don't try to tell me a 14nm sandwich is going to outperform a single plane 5nm TSMC in power, speed, price, or yield. 2021+ you say... or maybe +++ :P These architectures take ~5yrs to come to fruition, and Intel 7nm on non-UV is already more doomed than 10nm was.
Good point about Intel buying TSMC wafers, yet to be seen. Tho that's a fairly speculative thing to be making your bets on - Intel playing dirty with TSMC as the puppet, and none of TSMCs customers ala Apple(!) getting upset about it. Intel just isn't the biggest fish anymore, and they'll continue their decline until they start focusing on providing value to customers instead of milking them.
As for Xilinx, probably a strategic IP move against Nvidia more than anything. They're certainly doing fine independently and I don't see them dragging AMD down. You talk about how AMD stock price is valued several times higher than it should be - well then why is the 1.7:1 AMD:Xilinx share ratio such a bad deal? Seems to me like these folks know what they're doing and can separate market hype from reality.
To me, looks totally reasonable.
ZugZug7 - Tuesday, October 27, 2020 - link*pricing /above/ Intel
Spunjji - Wednesday, October 28, 2020 - linkThis assclown has been whining that AMD "don't charge enough" for a while, and then when the 5000 series was announced - and the other Intel shills went into overdrive saying they're overcharging - he *carried on saying they're not charging enough*.
Spunjji - Wednesday, October 28, 2020 - linkAwesome, if you're against it then it must be a good decision 👍 Time to buy AMD stock peeps, TheJian is whinging again!
Teckk - Wednesday, October 28, 2020 - linkLOL. You read his comments !??
poohbear - Tuesday, October 27, 2020 - linkNo offense, but i'm pretty sure Lisa Su knows what she's doing. After what she did with AMD, if she says they need to buy Xilinx, then they need to buy Xilinx.
sing_electric - Wednesday, October 28, 2020 - linkShe's smart and been a great CEO, but no one is incapable of making mistakes. Xilinx has a strong portfolio of products and technology, but I think the real question is whether its worth $35bn. Put another way, acquiring a company (hence all the shares) is the same as acquiring a few shares: The goal is to buy low, sell high, and AMD is buying when Xilinx's valuation has already skyrocketed during a pandemic whose full economic shakeout is still playing out.
Martimus - Tuesday, October 27, 2020 - linkXilinx had a net income of $612M over the last 12 months compared to a net income of $609M for AMD. This is actually a down year for them compared to last year a well. It will be nice to have a steady stream of income outside of their x86 business since that hasn't been very reliable money maker over their life.
six_tymes - Tuesday, October 27, 2020 - linkno one balks at this, but they balked at nvidia buying a company. I smell corruption.