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AMD to buy chip peer Xilinx for $35 billion in data center push

The deal intensifies AMD's battle with Intel in the data center chip market

PHOTO: Lisa Su, president and CEO of AMD, gives a keynote address during the 2019 CES in Las Vegas. REUTERS/Steve Marcus/File Photo
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  • The two U.S. companies have benefited from a more nimble approach to grab market share from Intel, which has struggled with internal manufacturing
  • AMD has long been Intel’s chief rival for central processor units (CPUs) in the personal computer business;
  • Under the deal, AMD shareholders will own about 74% of the combined firm, with Xilinx shareholders owning the remaining 26%.

AMD said on Tuesday it would buy Xilinx in a $35 billion all-stock deal, intensifying its battle with Intel in the data center chip market.

The deal, which AMD expects to close at the end of 2021, will create a combined company with 13,000 engineers and a completely outsourced manufacturing strategy that relies heavily on TSMC.

The two U.S. companies have benefited from a more nimble approach to grab market share from Intel, which has struggled with internal manufacturing. AMD has long been Intel’s chief rival for central processor units (CPUs) in the personal computer business.

Since Chief Executive Lisa Su took over AMD in 2014, she has focused on challenging Intel in the fast-growing business of data centers that power internet-based applications and services and are fueling the rise of artificial intelligence and fifth-generation telecommunications networks.

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“There are some areas where we’re very strong, and we will be able to accelerate some of the adoption of the Xilinx product family,” Su told Reuters in an interview. “And there are some areas where (Xilinx CEO) Victor (Peng) is very strong, and we believe that we’ll be able to accelerate some of the AMD products into those markets.”

Under the deal, Xilinx shareholders will receive about 1.7 shares of AMD common stock for each share of Xilinx common stock, valuing Xilinx at $143 per share based on a 10-day average for AMD share prices up to Oct. 8, or about 24.8% higher than its $114.55 closing price on Oct. 26. AMD shareholders will own about 74% of the combined firm, with Xilinx shareholders owning the remaining 26%.

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