Why AMD’s Xilinx Takeover is a Good Deal for India

AMD has officially taken over FPGA maker Xilinx in what can be called as the biggest acquisition in the history of the chip industry. The $35 billion acquisition can be a good news for the Indian semiconductor market, especially as AMD will double its presence in India, especially in terms of headcount.

“It is a momentous occasion for AMD as we close the acquisition of Xilinx today, establishing ourselves as the industry’s high-performance and adaptive computing leader. “Outside North America, Xilinx has its largest employee presence in Hyderabad, doubling AMD’s presence in India,” AMD India Country Head Jaya Jagadish said in a statement.

He added that he looks forward to working with the Xilinx team to expand AMD’s product portfolio into adaptive computing solutions to accelerate an even more diverse set of emerging and evolving workloads. The acquisition expands AMD’s total addressable market to $135 billion from $80 billion.

The closing of the deal comes on the heels of Nvidia’s decision to abandon its plans to buy SoftBank-owned Arm Ltd, citing regulatory hurdles.

The x86 processor giant completed the all-stock $49bn takeover of Xilinx on Monday. In 2020, AMD announced it had agreed to acquire the company in a deal back then worth $35bn, pending approval. The last hurdle was getting the green signal from the Chinese government, which wrapped up earlier this month.

Over the next decade, high-performance computing will be at the center of nearly every major trend shaping the future. Whether in the cloud, at the edge or across the growing number of intelligent end devices — there is an increasing need to push the envelope to enable new experiences and services. While CPUs and GPUs will remain critical engines for those devices, in a world where algorithms are always advancing and new standards are continually emerging, we see demand growing for adaptive computing capabilities that will be critical to accelerate these emerging and evolving workloads.

“The acquisition of Xilinx brings together a highly complementary set of products, customers and markets combined with differentiated IP and world-class talent to create the industry’s high-performance and adaptive computing leader,” Dr. Lisa Su, Chair and CEO said in a statement.

According to her, “Xilinx offers industry-leading FPGAs, adaptive SoCs, AI inference engines and software expertise that enable AMD to offer the strongest portfolio of high-performance and adaptive computing solutions in the industry and capture a larger share of the approximately $135 billion market opportunity we see across cloud, edge, and intelligent devices,”.

AMD now offers the industry’s strongest portfolio of high-performance and adaptive processor technologies to enable leadership computing platforms for cloud, edge and intelligent end devices.

“With more than 15,000 talented engineers, the significantly expanded R&D scale of the new company strengthens the long-term product and solutions roadmaps for both AMD and Xilinx customers,” said Su.

The Xilinx business will become the Adaptive and Embedded Computing Group (AECG), led by former Xilinx CEO Victor Peng.

AECG remains focused on driving leadership FPGA, Adaptive SoC and software roadmaps, now with the additional scale of the combined company and the ability to offer an expanded set of platforms including high-performance CPUs and GPUs, the company said.

The acquisition provides multiple benefits, including, AMD’s TAM from $80B to $135B, expanding AMD’s customer base, and diversifying AMD into new markets. At the same time, Xilinx’s deep strategic partnerships across wired and wireless communications, automotive, industrial and test, aerospace and defense, broadcast, measurement and emulation, and consumer markets complement AMD partnerships in the PC and data center markets.

The acquisition will offer incremental scale to AMD’s R&D. It brings additional capabilities in advanced technology development, including leadership die stacking and packaging technology, chiplet and interconnect technology, AI and domain-specific architectures and best-of-breed software platforms.

Victor Peng, President of the newly formed Adaptive and Embedded Computing Group (AECG) said, “The rapid expansion of connected devices and data-intensive applications with embedded AI are driving the growing demand for highly efficient and adaptive high-performance computing solutions. Bringing AMD and Xilinx together will accelerate our ability to define this new era of computing by providing the most comprehensive portfolio of adaptive computing platforms capable of powering a wide range of intelligent applications.”

The acquisition will further strengthen AMD’s financial model. It will provides multiple diverse revenue streams across new end markets with long, high-margin product cycles while maintaining AMD’s industry-leading growth.

The transaction is expected to be accretive to non-GAAP gross and operating margins, non-GAAP EPS and free cash flow generation in the first year. The company said that the new AMD will cover the most important markets and customers in the world with a combined TAM of approximately $135 billion in 2023.