Chip Maker AMD Is Optimistic About Xilinx Purchase

Chip giant AMD expects its $35 billion acquisition of Xilinx will be good for business. Following the deal’s close in early February, CEO Dr. Lisa Su said that buying the San Jose-based semiconductor manufacturing company would help AMD grow past its competition by 20%. "This acquisition is accretive in the first year for gross margins, for earnings per share, and for free cash flow,” she told 5,000 Xilinx employees.

The all-stock transaction is the 53-year-old company’s largest to date and provides expertise in the programmable chip market. AMD has been competing with Intel in cloud computing workloads and data centers, and Xilinx’ capabilities will help continue the quest for market share. With the purchase, Su and AMD hope to leap frog the competition and catapult themselves to the top of the industry. Su cited technological, financial, and consumer benefits of the purchase, which was first announced in October 2020.

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“[The deal will enable us to] capture a larger share of the approximately $135 billion market opportunity we see across cloud, edge, and intelligent devices,” Su said.

Former Xilinx CEO Victor Peng will join AMD as president of the newly formed Adaptive and Embedded Computing Group (AECG), which will offer an expanded set of solutions, including AMD CPUs and GPUs.

Xilinx stockholders received 1.7234 shares of AMD common stock and cash in lieu of any fractional shares of AMD common stock for each share of Xilinx common stock. Xilinx common stock will no longer be listed for trading on the NASDAQ stock market. AMD projected 31% revenue growth for 2022 and gross profit margins of 51%.

The Santa Clara-based multinational company develops computer processors and related technologies for business and consumer markets, including high-performance and adaptive computing products spanning CPUs, GPUs, FPGAs, and Adaptive SoCs.