Pensando, founded by former executives from Cisco, will add to AMD’s ongoing push into the lucrative data center chip market.
Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report said Monday it has agreed to a $1.9 billion takeover of enterprise services start-up group Pensando as the chipmaker pushes deeper into the lucrative data center market.
AMD will pay $1.9 billion — less adjustments for working capital — for the Milpitas, California-based group, which includes blue-chip clients such as Goldman Sachs (GS) – Get Goldman Sachs Group, Inc. Report, IBM (IBM) – Get International Business Machines Corporation Report, Microsoft (MSFT) – Get Microsoft Corporation Report and Oracle (ORCL) – Get Oracle Corporation Report as part of its customer base.
Data center revenues comprised around a quarter of AMD’s 2021 topline, with the group forecasting “another year of significant growth based on the strong customer demand signals for our current and next-generation products”.
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“To build a leading-edge data center with the best performance, security, flexibility and lowest total cost of ownership requires a wide range of compute engines,” said CEO Lisa Su “All major cloud and OEM customers have adopted EPYC processors to power their data center offerings. Today, with our acquisition of Pensando, we add a leading distributed services platform to our high-performance CPU, GPU, FPGA and adaptive SoC portfolio.”
“The Pensando team brings world-class expertise and a proven track record of innovation at the chip, software and platform level which expands our ability to offer leadership solutions for our cloud, enterprise and edge customers,” she added.
AMD shares were marked 0.5% higher in pre-market trading immediately following news of the Pensando takeover to indicate an opening bell price of $108.70 each.
AMD said last month that 2022 revenues should come in north of $21.5 billion, a 30% increase from last that that is also well ahead of the Refinitiv forecast of $19.25 billion, thanks to surging demand for its data center chips.
For the three months ending in December, AMD posted earnings of 92 cents per share, topping Street forecasts by 16 cents, on adjusted revenues of $4.83 billion. Over the whole of 2021, in fact, cloud and enterprise server chip sales more than doubled, leading in part to the optimism underpinning the 2022 sales guidance.
AMD is also expected to get a boost from its $35 billion takeover of Xilinx (XLNX) – Get Xilinx, Inc. Report, which was recently cleared by market regulators in China.
Xilinx’s data-center chips have become much more valuable in the wake of the global pandemic, triggered in part by a surge in work-from-home dynamics that have pressured companies around the world to improve their technology and storage capabilities.
