MATTHEW BYATT
Managing Partner
AMD Xilinx Deal Threatens Intel’s Data Centre Dominance
Following the controversial Nvidia Arm acquisition, another deal with seismic implications for the semiconductor industry is looming on the horizon. The Wall Street Journal reports that AMD is in advanced talks to acquire chipmaker Xilinx in a purchase worth an estimated $30 billion.
As a specialist in field-programmable gate array (FPGA) chips, Xilinx is not so much a competitor as it is complementary to AMD. The deal would help AMD expand beyond providing consumer chips for Dell, HP and Apple laptops, and strengthen its presence in the high-margin data centre processor market, which is currently dominated by Intel.
In one of tech’s oldest rivalries, the competition between Intel and AMD stretches back fifty years. But in the last three, AMD has been pulling away from its nemesis, making a multiyear comeback driven by its Zen microarchitecture. This resurgence has intensified over the past year, with AMD stock outpacing Intel to rally 180% – putting the firm in a strong position to launch itself deeply into data centre territory.
Xilinx’s FPGA chips can be configured by designers to suit a specific purpose, adding capabilities and performance beyond a traditional CPU and GPU. This makes them particularly useful for accelerating demanding AI and analytics tasks for data centres, and specialised enterprise applications like optimising communication across 5G networks.
With Xilinx, AMD would acquire roughly half of the FPGA market, which is shared with Intel in a duopoly over programmable logic. Intel’s half of the market was also gained through acquisition, with the firm buying Xilinx’s primary competitor Altera for $16.7 billion back in 2015 to form the Programmable Solutions Group.
For the broader semiconductor market, AMD’s acquisition of Xilinx could turn a bumper year for deal making into a record breaker. In July, Analog Devices agreed to purchase Maxim for more than $20 billion, and then in September, Nvidia agreed to purchase Arm from SoftBank for $40 billion. These megadeals, combined with the Xilinx purchase and several smaller agreements, could push the total 2020 chip market deal value to over $100bn – marking a record year for chip sector consolidation.
“Imitation is the sincerest form of flattery and it comes as no surprise that AMD is following Intel’s lead and acquiring their own FGPA giant. If this acquisition happens, it really is a definitive statement of their intent to be a real force in the datacenter market. If it doesn’t come off, then it is a helpful reminder of AMD’s level of ambition and how they continue to take the fight to Intel. Watch this space.”
Matthew Byatt | Managing Partner
Matthew is a Co-Founder and Managing Partner at Acuity and leads the Acuity Advisors’ Deeptech practice.
Matthew has held senior leadership and corporate finance positions with some of the UK’s most successful and influential technology and consultancy companies. Roles with ARM, McKinsey and Cadence have given Matthew an exceptional insight into the world’s most successful businesses and a number of the UK’s eminent start-ups, underpinning his success at Acuity.
Matthew has considerable experience across a broad range of technology sectors throughout the UK, US and Asia, ranging from nanotechnology, semiconductor and cleantech to digital media and internet businesses. It’s experience that has given him a robust, well-developed and international network. Having also run and successfully exited his own business, Matthew has a deep understanding of the financial and emotional aspects of this demanding process, bringing a unique and authoritative perspective to each business sale.
One of Matthew’s strengths is understanding complex technical value propositions, one of the benefits of training as an electronic engineer. He gets to the heart of what drives a company’s value and communicates this persuasively to potential buyers and investors. Matthew understands a buyer’s motivation intuitively and delivers a compelling rationale for why a business sale should be of strategic interest. His insight consistently yields higher deal values and results in great successes for his clients.