AMD is said to be negotiating to buy Xilinx, and a deal could come as soon as next week. If the two companies agree, the deal would likely be worth approximately $30 billion, according to The Wall Street Journal.
The value of AMD shares has soared of late, which means it should be able to much more easily swing a deal, and pay largely in stock. The WSJ reported that AMD’s stock grew 89 percent this year, and the company now has a valuation over $100 billion. Xilinx, meanwhile, has had to contend with the vicissitudes of President Donald Trump’s trade war with China; it tried and failed to secure a dispensation to keep supplying Huawei.
AMD buying Xilinx would be the second mega-merger announced this year, following Nvidia’s announcement it intends to buy Arm Holdings for $40 billion.
About 20 years ago, the merger would have set off a firestorm in the electronics distribution industry. Xilinx and archrival Altera were the last practitioners of shelf-sharing -- a refusal to be sold side-by-side within a single distributor. Xilinx was firmly in Avnet Inc.'s camp; Altera was sold by Arrow Electronics Inc. Intel's acquisition of Altera in 2015 blurred those lines -- both Arrow and Avnet distribute Intel and AMD.
Nevertheless, consolidation among semiconductor suppliers causes agita within the channel. Analog Devices' acquisition of Maxim Integrated has implications for both Avnet and Arrow. When ADI acquired Linear Technology in 2017, ADI dropped Avnet and consolidated its volume distribution business under Arrow. Avnet is a global distributor for Maxim and faces the possibility that ADI may again reduce its channel.
The AMD-Xilinx combination is reminiscent of Intel’s $16.7 billion purchase of Altera for another reason: it would be another instance of a leading provider of CPUs buying a specialist in FPGAs, and for similar reasons — to gain control of a complementary chip technology important in data centers in general, and with artificial intelligence (AI) workloads specifically. FPGAs are often used for AI acceleration.
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