AMD Completes Record $50B Purchase of Xilinx

On Monday, Advanced Micro Devices, Inc. (AMD) completed its $50.00 billion worth of all-stock purchase of FPGA designer Xilinx.

This transaction marks the largest move of AMD, giving the firm an edge in the high performance computing space (HPC).

Experts anticipated the global HPC market to elevate from $37.80 billion in 2020 to $49.40 billion in 2025.

Remarkably, the Xilinx acquisition could prove to be a major growth catalyst for AMD.

The deal’s closing also gives the processor giant a foothold in the key data center market.

Then, it will enable AMD to intensify its battle with Intel Corporation, which owns Altera, another major FPGA vendor.

Under the terms of the deal, Xilinx will be the Adaptive and Embedded Computing Group (AECG) within AMD.

Accordingly, the combined company will operate with more than 15,000 engineers.

In addition, it has a completely outsourced manufacturing strategy that relies heavily on Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC).

In line with this, the firms expected the accord to generate $300.00 million in cost savings within 18 months.

Moreover, Xilinx shareholders received 1.72 shares of AMD for each stock they have as of February 14. This sent the deal’s value at approximately $50.00 billion.

The agreement was worth $35.00 billion in October 2020. However, the upturn movement of AMD’s stock has pushed up the price tag.

On Monday, it touched an intraday gain of more than 4.00%, sending the stock to a closing level of $114.27.

Correspondingly, the American semiconductor business now stands firmly with a market capitalization of $137.04 billion.

Meanwhile, the Xilinx purchase comes on the heels of Nvidia Corp.’s decision to scrap its plans to acquire Arm Ltd, citing regulatory hurdles.

AMD’s Broad-Based Strength in Q4

In the last earnings report, AMD outlined its broad-based strength across all business segments in the fourth quarter.

It saw its computing and graphics segment’s revenues climb by 32.00% year-over-year to $2.60 billion.

Subsequently, analysts expected the trend to become even stronger in the second half of 2022.

At the same time, AMD takes major strides for its GPU business in data centers and gaming. It reported a more than 100% gain in data center graphic revenues.

The business mainly benefitted from the increased demand for GPU in artificial intelligence and high-performance computing workloads.

In the stated case, AMD released positive full-year guidance. It forecasted a 31.00% revenue growth for 2022 and gross profit margins of 51.00%.