Advanced Micro Devices, Inc. (AMD) to buy Xilinx to challenge Intel in data Center business

AMD is buying Xilinx Inc in a $35 billion deal which will close its technology gap with its rival Intel Corp in the data centre chip market. The deal is expected to finalize at the end of 2021. The Outcome will be a new company with 13,000 engineers and will heavily rely on Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

AMD is the biggest rival of the Intel for manufacturing CPUs in computer systems. Intel is suffering from internal manufacturing and the two U.S firms AMD and Xilinx have taken intel market shares by more quick strategy.

Chief executive of AMD focused on challenging intel`s monopoly in the fast-growing data centre business that is a key part of internet-based applications and it will play an important role in the rise of 5G technology and artificial intelligence.

Xilinx is upgrading data centres with new programmable processors which will reduce the time to perform a different task such as compressing videos or providing digital encryption. The Primary rival of Xilinx was Altera Corp, which was bought by Intel for $16.7billion back in 2015 which was the largest ever deal by Intel.

The share of Xilinx went up by 12% after the deal news while AMD share price went down by 4%.Xilinx shareholders will receive about 1.7 shares of AMD common stock for each share of Xilinx common stock. The value of Xilinx share will be $143 which is higher than its $114.55 closing price on Oct. 26. The Shareholder of AMD will own 74% of the Combined company and Xilinx shareholders will own the remaining 26%. The Merger of the two companies will result in savings of $300 million in cost and AMD Su will be CEO of the combined business.

AMD also announces its quarterly results earlier than scheduled. The reported revenue was $2.8 billion and earnings of 41 cents per share which was more than the expectations.