AMD recently announced that it’ll be purchasing Xilinx, a rival chipmaker, and the market leader in the FPGA space. The US$35 billion deal comes at a substantial cost, with AMD shareholders owning roughly 3/4 of the newly joint company and Xilinx holding on to another quarter. Xilinx’s Victor Peng is also set to become AMD’s President as part of the deal.
Why does AMD’s Xilinx acquisition matter and what are the potential impacts? As of now, Xilinx and Altera (which Intel recently acquired) are the two biggest players in the FPGA (field-programmable gate array) markets. FPGAs are chipsets that can be reprogrammed after they’re manufactured. This makes them useful in a number of situations, like CPU design prototyping, military and aerospace applications, and 5G infrastructure.
The Xilinx deal will expand AMD’s talent pool to 13,000 engineers many of whom will now have considerable experience working with FPGA hardware. The prospects here are tantalizing. AMD has long struggled to show Intel up in the B2B and enterprise spaces. Their new FPGA acquisition could allow AMD to make new inroads, as well as play a bigger role in the design of 5G infrastructure around the world. The timing of the announcement is also very interesting.
AMD is set to launch Big Navi, supposedly its most competitive consumer graphics card yet, on October 28th. NVIDIA, on the other hand, acquired another major chipmaker, ARM, just a month ago. This is a clear power play by a resurgent AMD but we’ll need to wait and see whether they’re able to steer their new FPGA business in the right direction.