- Advanced Micro Devices (AMD) is in commercial negotiations to acquire the leading FPGA (Field Programmable Gate Array Chip) manufacturer Xilinx (Xilinx)
- Xilinx shares rose 14.11% on October 9 to close at $120.94
- AMD is the world's second-largest CPU manufacturer, and Xilinx is the world's leading provider of programmable logic chips
Recently, the processor manufacturer Advanced Micro Devices (AMD) is in commercial negotiations to acquire the leading FPGA (Field Programmable Gate Array Chip) manufacturer Xilinx (Xilinx), the transaction value may exceed $30 billion. Affected by this news, Xilinx shares rose 14.11% on October 9 to close at $120.94.
But the market doesn’t seem to be optimistic about AMD’s acquisition. AMD’s stock price fell $3.41 that day. If the deal is reached, it will be the second-largest semiconductor M&A transaction in 2020, and it will also be AMD’s largest M&A transaction after AMD acquired ATI Technologies for $5.4 billion in 2006.
AMD will use this transaction to build a product line layout of CPU+GPU+FPGA, which is a key to the next generation of heterogeneous computing.
It also means that AMD will have the opportunity to penetrate into AI chips, Internet of Things, aviation, and automobiles, 5G communications, artificial intelligence and other fields, greatly expanding the business area, enabling AMD to build a solid defense fortress in the semiconductor field of giants.
What Is Sacred AMD and Xilinx?
AMD is the world’s second-largest CPU manufacturer, and Xilinx is the world’s leading provider of programmable logic chips. The product lines of the two companies are less overlapped, but the development of the two companies has a great origin.
After AMD acquired MMI (Monolithic Memories) in 1988, it became the second source of supply for Xilinx FPGA products, but later AMD and Xilinx reached an agreement to discontinue the FPGA product line, and Xilinx sold part of its shares to AMD in exchange, AMD later sold shares in Xilinx.
The current CTO of Xilinx, Victor Peng, was previously the vice president of chip engineering of AMD’s Graphics Products Group (GPG) and was the leader of AMD’s core chip engineering team.
AMD was founded in Silicon Valley in 1969, only one year later than Intel. AMD founder Sanders and Intel founders Noyce and Moore both worked at Fairchild Semiconductor.
The two companies can be described as having the same origin and different “fate”. For more than 40 years, Intel’s CPU technology has been leading the world, while AMD has moved from a follower to independent self-research.
After ups and downs, it has gradually gained the ability to “wrest the wrist” with Intel. In October 2020, AMD officially announced the new Zen 3 CPU architecture with TSMC’s 7nm process and the latest generation of Ryzen 5000 series desktop processors, which technically surpassed Intel.
In the capital market, AMD’s stock price fell below $2 in 2015, leaving only $1.9 billion in market value. As of the close on October 8, 2020, AMD’s stock price has risen to $86.51, with a total market value of approximately $101.568 billion. Since the beginning of this year, the company’s stock price has soared by 90%, and the stock price has risen more than 50 times since 2015.
Xilinx was founded in 1984 and is the inventor of FPGA, programmable SoC and ACAP. Its highly flexible programmable chip is supported by a series of advanced software and tools, which can be used in consumer electronics, automotive electronics and the cloud.
Compared with CPUs and GPUs, FPGAs, another important member of the chip family, are less well-known, but with the rapid development of 5G communications, big data, and the Internet of Things, the importance of FPGAs is getting more and more attention from the market.
Looking at the world, Xilinx, Altera, Lattice and Microsemi have almost monopolized the FPGA market. Among them, Xilinx is in a leading position in technology, with a market share of 50%, and Altera has been acquired by Intel in 2015.
As of the close of October 8, Xilinx reported $105.99 per share, with a total market value of $25.89 billion, which is about 1/4 of AMD’s market value. Since 2020, the stock price has risen by about 9%, slightly higher than the S&P 500 index.