AMD in $35 Billion All-Stock Acquisition of Xilinx
by 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.”
Details
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.
Portfolio
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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ivoleiden - Monday, November 2, 2020 - link
I think it's a bigger play that what most people estimate.1- Xilinx- good balance sheet, great net profit
2- FPGA and Interconnect about to explode: data centres, 5G, automotive
3- Xilinx has more advanced packaging technology, which will also allow AMD to greatly advance in their goals of integrating CPU, GPU, Accelerators, Memory... all in the same die
4- The accelerators on their own. The way that Apple customized their ARM products. Huge opportunity
5- Back to the data centre- an all integrated solution from one vendor only - CPU, GPU, FPGA, Interconnect
ChaosFenix - Tuesday, October 27, 2020 - link
I can see this also allowing the new AMD to both have more sway at TSMC as well as optimally allocating wafers to what is most important to its bottom line.Spunjji - Wednesday, October 28, 2020 - link
That's actually a really good call... I just did a little more Googling and came across this:https://www.xilinx.com/news/press/2017/xilinx-arm-...
It wouldn't do AMD any harm at all to be close to another company that have an established record of working closely with TSMC on the development of their latest processes.
mdriftmeyer - Tuesday, October 27, 2020 - link
What can an FPGA provide AMD? Ever seen Apple’s Afterburner in action?That’s just one example. Now expand that with professional music production products and you can see how valuable in the creative arts what an FPGA can do.
You get hot n’ bothered about AVX when future custom PCIe post production or studio audio effects offloading cards, to AI cards and/or SoC features added to future Zen and RDNA/CDNA cards are obvious areas where this merger can provide
cb88 - Tuesday, October 27, 2020 - link
Xilinx has probably more chiplet experience than any other company... they've been doing chiplet based FPGAs for *generations* at this point.TheJian - Tuesday, October 27, 2020 - link
Seems like AMD just bought ATI again. This one isn't quite as bad as paying 3.5x what it's worth but it's still really bad. I wouldn't want to own it after that price and it's not worth the price now anyway before the buy. I said yesterday they might make 1/2B net. NOPE. Not even 400mil NET if info posted right now is right. I'll listen to the call later. 390mil at this point just tells you they keep charging too little and making nothing. Only expected to make about 60mil on 650mil of parts from consoles (~6mil units expected shortly). Stupid to waste wafers on this crap at $10-15 each vs. servers or HEDT or even large gpus. Too bad AMD hadn't went to the reticle limit at TSMC, as 830mm^2 would have killed NV cards stuck at 630 at samsung on a worse process. You would be charging $1600 at worst for a 3090 killer, of course you would have priced it at $800 anyway and blown the whole thing...ROFL. Bad management. Market for no income is stupid.BAD MOVE. This is why she's telling you gpus are made up for by cpus. Why not make a good GPU too? You stupidly had a price war going with Intel for 3yrs. They are about to bite back and you still haven't made any income, just stupid people buying stock at ridiculous prices on hype. At some point you need 1B Q's heading to 1.5-2B. NET INCOME, not revenue. The stock is priced like you are making 6B a year heading to 8. But you are MILES from that and Intel is pulling in chips. New one Q1, Q2, then Q1's dead by Q3/4 with another. TSMC/INTC gpus will be flowing Q1 probably too, so whatever your gpus are doing to cause the CEO to say our cpu sales make up for them going down, well, it's going to get worse, especially knowing you went SMALL vs. NV. Welcome to gpu discount land again, while NV bangs out NET INCOME. I'll be surprised if they don't hit 1B NET this Q again (4 in a row 1B+ 2018, heading back there now). Still, wouldn't touch NV stock either...ROFL. Not even with YOUR pole. ;) I can't buy a stock making less than 2018 at 240-280. Someone explain $540? Or 590 short time ago...f'ing insane. Are you making 8.5B now? Hiding 4.5B somewhere? Because that is what it would take for me to say $500 and I'd be running then not buying it.
AMD spent 3yrs gaining share, for what? To give it back to Intel before making billions yearly? By xmas 2021 this is a whole other game, not to mention Intel's ~4 packing techs that can change the whole story too. They are about a year ahead on stacking tech vs. TSMC, so at some point adding layers will be a game changer. We can already see they can combine 4 different fab slabs in one (and not all from them)...Impressive. Intel has chiplets too, so again, I only see AMD losing at some point here. All Intel has to do is cut margin until AMD can't sell (not illegal if you're still making profits), or buy TSMC wafers at a higher price than AMD when they're contract is up. :) Easy. Too bad AMD hadn't just priced at Intel or above levels for 3yrs. Yeah, you'd have less share, but Intel wouldn't have went into BEAST MODE (killing 2 chips in a year it looks like by Xmas 2021?), and you'd have lots more INCOME. Intel can bleed billions per year, see mobile (4B+ pissed away for 4.5yrs). How can AMD compete if Intel does the same to them as mobile next year? Intel would do fine on even 10B NET INCOME, but coming from 21B+ they have a LOT to piss away on wafers at TSMC, pricing vs. AMD, gpus coming to add more income etc. Not good. Long Intel 2021+. Wake me when AMD/NV make more than before. AMD 2009 Q4 1B+ NET INCOME quarter, not YEAR. NV as noted 4Q's 1B+ 2018 at half stock price today (less).
:nudge> - Tuesday, October 27, 2020 - link
glad we don't go to the same partiesSmell This - Tuesday, November 3, 2020 - link
Uhhh, yeah.Lost in the Ozone, again__the FAIL started with "Seems like AMD just bought ATI again..."
hecksagon - Tuesday, October 27, 2020 - link
You are out of your fucking mind. Net income isn't that important of a metric when a company is growing. Companies have to spend money to grow. You trying to tell me you wouldn't have bought Amazon stock in 2015 when they had negative net income? How about Tesla 3 years ago?Also you brought up the Intel GPUs. Maybe you were joking. Hard to tell with the lack of sentence structure and punctuation. Midrange 2013 performance isn't going to convince anybody to buy that product. I will be a complete non-factor in the next hardware cycle. Nobody is going to get excited seeing an Intel Graphics sticker on their laptop. What is going to excite them is having a higher core count to brag about.
Tilmitt - Tuesday, October 27, 2020 - link
Good to see someone actually interested in going through the numbers.