World News – United States – AMré Agrees to buy Xilinx for $ 35 billion in stock

The deal would expand AMr’s business in chips for markets such as 5G communications and automotive electronics

SAN FRANCISCO – Advanced Micro Devices has agreed to pay $ 35 billion in stock for Xilinx, a deal to reshape one of the pioneers in the computer chip industry

AMré, known primarily as Intel’s long-standing rival in the microprocessors that power most computers, plans to use the acquisition to expand its business to chips for markets such as 5G wireless communications and automotive electronics The deal could also help AMré capture a larger share of data center component sales and counter a leading rival, Nvidia, which is also growing

All-stock deal announced Tuesday with AMré Third quarter financial results reportedly close to most valuable acquisition in chip industry history These bragging rights are currently held by Nvidia for its project UK chip designer Arm’s $ 40 billion deal announced last month

Chipmakers have seen several waves of consolidation, driven by factors such as duplication of product lines and cost-cutting strategies But UnMré, which enjoys some of the strongest sales in its 51-year history story, expects Xilinx to expand its business while increasing profits

Lisa Su, AMré’s chief executive of industry, said in prepared remarks that Xilinx will help establish her company as « the leader in high performance computing and the partner of choice for the biggest and most major technology companies in the world « 

This kind of reputation has long eluded AMré, who for decades was considered an Intel follower who mostly won sales with lower prices but the company has recently taken a step ahead of Intel. in some key metrics of IT performance, while its biggest rival has suffered technological and financial stumbles

Last Thursday, Intel reported a 29% drop in quarterly profits, which caused its stock to drop more than 10% UNEMre, by contrast, reported on Tuesday that its quarterly profit rose 148%

The company’s shares, which traded five years ago at around $ 2 a share, rose nearly 80% this year and closed at just over $ 82 on Monday. The company’s market value now stands at nearly $ 100 billion

Xilinx, founded in 1984, is the largest manufacturer in a class of chips that can be reconfigured for a variety of specialized tasks after they leave the factory.These field programmable gate arrays, as they are called , have long been particularly popular in telecommunications applications, such as cellular base stations currently being upgraded to the latest 5G technology

Xilinx has also been one of the largest chip companies hit by trade restrictions on Huawei in China, a major network equipment maker that is one of Xilinx’s biggest customers The company said the last week that his income had decreased by 8%

But Xilinx’s gross margins are well above AMre And the company continues to generate considerable liquidity Xilinx’s market value currently stands at around $ 28 billion, reflecting a sharp rise after Wall Street Journal announced deal negotiations between the companies in October 8

AMré Xilinx interest emulates a path taken by Intel In 2015, Intel entered the same company by paying $ 16 billion to Altera, Xilinx’s main competitor This deal, inspired in part by the prospect of producing Altera chips in Intel factories, failed to generate high yields as Intel’s manufacturing processes lagged behind their competitors

AMré relies heavily on external manufacturing partners, as does Xilinx – particularly Taiwan Semiconductor Manufacturing Company, which has taken the lead in packing smaller transistors on each chip. Both companies have also pushed new technologies to create new products from packaging several chips together

The proposed transaction eclipses AMre’s largest past acquisition of $ 4 billion for ATI Technologies in 2006 which pitted the company against Nvidia for chips that render images in video games This graphics technology would make AMre a major supplier of chips for video game consoles But it also saddled AMré with heavy debt that took more than a decade to erase

The companies said the deal is expected to be completed by the end of 2021 Victor Peng, managing director of Xilinx, will continue to lead the operation after the deal is closed, the companies said

Advanced Micro Devices, Xilinx, Stock, NASDAQ: AMD