AMD to Enter the FPGA Market, in Advanced Talks to Acquire Xilinx

[Pickles von Brine]

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AMD is planning to enter the FPGA market by buying out one of Intel's largest competitors, Xilinx. The Wall Street Journal reports that AMD is in "advanced talks" to acquire the San Jose-based firm which specializes in FPGAs of all shapes and sizes, including large, high logic cell-count FPGAs under the Virtex UltraScale brand, the main competitor to Intel's Stratix 10. Xilinx is valued at $26 billion, although analysts estimate the AMD acquisition to go down at close to $30 billion, making it one of the largest tech acquisitions of the year, after NVIDIA's buyout of Arm from Softbank. An FPGA lineup would give AMD a near complete portfolio of computing hardware IP: CPUs with x86 and Arm licenses, GPUs, GPU-based scalar compute processors, semi-custom SoCs, low-power media processors, and now FPGA.

Well, this was a surprise but also not a surprise. AMD already has a lot of experience with semi-custom processors, especialyl with the consoles, so adding that expertise to FPGAs could be interesting. Plus, diversifying what they already have is never a bad idea. Additionally, it will give them another branch to be on par with Intel, since they too have an FPGA devision. Good to see this kind of thing happen. 


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[themaniac]

I know AMD has been making a lot of good money and have been growing a lot in the last few years. But can they really afford to spend $30billion right now? Sure it could be of massive benefit to them, but the last time AMD made a large purchase iirc was ATI and im sure most of us know what happened.

[Fatih19]

10 minutes ago, themaniac said:

I know AMD has been making a lot of good money and have been growing a lot in the last few years. But can they really afford to spend $30billion right now? Sure it could be of massive benefit to them, but the last time AMD made a large purchase iirc was ATI and im sure most of us know what happened.

Are we witnessing history repeating itself?

[TukangUsapEmenq]

2 minutes ago, Fatih19 said:

Are we witnessing history repeating itself?

I hope not, would be interesting to use a AMD-based FPGA board on my campus lol

[Liltrekkie]

11 minutes ago, themaniac said:

I know AMD has been making a lot of good money and have been growing a lot in the last few years. But can they really afford to spend $30billion right now? Sure it could be of massive benefit to them, but the last time AMD made a large purchase iirc was ATI and im sure most of us know what happened.

They can afford it. They have been pouring money into paying off debt since Zen 1. Console sales, plus the enormous success of Zen in the consumer and enterprise markets, would allow them to make a large purchase of this size easily. For the record, they had 1.93 billion in revenue in Q2 2020 alone.

[Fatih19]

2 minutes ago, Liltrekkie said:

They can afford it. They have been pouring money into paying off debt since Zen 1. Console sales, plus the enormous success of Zen in the consumer and enterprise markets, would allow them to make a large purchase of this size easily. For the record, they had 1.93 billion in revenue in Q2 2020 alone.

Do they use their cash on hand to do these kind of acquisition?

[themaniac]

Just now, Liltrekkie said:

They can afford it. They have been pouring money into paying off debt since Zen 1. Console sales, plus the enormous success of Zen in the consumer and enterprise markets, would allow them to make a large purchase of this size easily. For the record, they had 1.93 billion in revenue in Q2 2020 alone.

revenue =/= profit, just because they made nearly 2 billion in one quarter doesnt mean they made a decent profit. And just because they can afford to do so doesnt necessarily mean they should. Could this be a very smart decision on their part I can't say. I hope it is as I would like AMD to continue succeeding but I am hesitant to support a company who had just been on the verge of bankruptcy only a few years ago making such a large purchase right after they finally got back their footing.

[themaniac]

1 minute ago, Fatih19 said:

Do they use their cash on hand to do these kind of acquisition?

Some companies can, such as Intel they probably have the cash on hand, or atleast did until recently. But not AMD they are taking on debt and a lot of it to do this purchase. Gotta remember they are on the verge of bankruptcy a few years ago and only recently paid off most of their debt. There is absolutely no way they have anywhere close to $1 billion on hand let alone the $30 billion that the article is estimating

[Fatih19]

1 minute ago, themaniac said:

Some companies can, such as Intel they probably have the cash on hand, or atleast did until recently. But not AMD they are taking on debt and a lot of it to do this purchase. Gotta remember they are on the verge of bankruptcy a few years ago and only recently paid off most of their debt. There is absolutely no way they have anywhere close to $1 billion on hand let alone the $30 billion that the article is estimating

I looked it up and they only have 1.7 B cash on hand. https://www.macrotrends.net/stocks/charts/AMD/amd/cash-on-hand

CMIIW seems like a bad idea to be leveraged that much.

[themaniac]

3 minutes ago, Fatih19 said:

I looked it up and they only have 1.7 B cash on hand. https://www.macrotrends.net/stocks/charts/AMD/amd/cash-on-hand

CMIIW seems like a bad idea to be leveraged that much.

Thats really surprising to me, I would have never guessed they had that much. The most i would have guessed was $500 million.

[S w a t s o n]

50 minutes ago, Fatih19 said:

I looked it up and they only have 1.7 B cash on hand. https://www.macrotrends.net/stocks/charts/AMD/amd/cash-on-hand

CMIIW seems like a bad idea to be leveraged that much.

Any deal is likely to involve a lot of AMD stock but we'll see if this has any legs

[Fatih19]

4 minutes ago, S w a t s o n said:

Any deal is likely to involve a lot of AMD stock but we'll see if this has any legs

Can you elaborate?

[S w a t s o n]

Just now, Fatih19 said:

Can you elaborate?

Using stock to pay for any merger/acquisition rather than cash or debt

[Fatih19]

1 minute ago, S w a t s o n said:

Using stock to pay for any merger/acquisition rather than cash or debt

So they'd release new AMD stock and give it away for investors who has Xilinx stock? CMIIW.

[S w a t s o n]

4 minutes ago, Fatih19 said:

So they'd release new AMD stock and give it away for investors who has Xilinx stock? CMIIW.

Basically yes.

 

https://www.investopedia.com/ask/answers/06/stockforstockmergerdetails.asp

[Fatih19]

1 minute ago, S w a t s o n said:

Basically yes.

 

https://www.investopedia.com/ask/answers/06/stockforstockmergerdetails.asp

Dang, that would hurt AMD's stock prices tho, right? What if the investors who heard of this acquisition plan and AMD's most probable means of executing it sold all of their stocks knowing the stock-for-stock merger would devalue their stocks?

[S w a t s o n]

Just now, Fatih19 said:

Dang, that would hurt AMD's stock prices tho, right? What if the investors who heard of this acquisition plan and AMD's most probable means of executing it sold all of their stocks knowing the stock-for-stock merger would devalue their stocks?

Read the link fully for the answers

[Levent]

I find $30B is a lot for Xilinx. I feel like they are doing this to acquire talent and patents more so than diversifying.

[RejZoR]

2 hours ago, themaniac said:

I know AMD has been making a lot of good money and have been growing a lot in the last few years. But can they really afford to spend $30billion right now? Sure it could be of massive benefit to them, but the last time AMD made a large purchase iirc was ATI and im sure most of us know what happened.

And what has happened? It's like expecting ARM to suddenly make billions to NVIDIA. These are not short term turn over investments where you'd instantly earn a buck. These are long term investments. If AMD didn't buy ATi back then, there would be no entirely AMD consoles for the second or third generation?. There would be no entirely AMD laptops. There would be no compute clusters crammed with EPYC and Radeon Instinct GPU's. That's what ATi was purchased for. So you have a complete offering. Otherwise AMD would only be selling CPU's and the rest would be done by ATi or NVIDIA. People may be smartasses and complain over it, but AMD buying ATi was one of the best investments AMD could have made.

[Master Disaster]

For some perspective, back in 2015 Intel paid $16.7 billion for Altera who at the time had a yearly revenue of $1.93 billion.

 

Xilinx had a yearly revenue of $3 billion in 2019.

[AlexGoesHigh]

IMO they are doing this out of need, not to diversify, next year with intel Xe hitting the market, intel will have full stack solutions for all computing needs, Nvidia too will have full stacks in a couple years with ARM and turning melanox into a networking branch in the company, all they are waiting for, is for their impending ARM server CPU to be fully baked and ready, or at the very minimum buy a customized version of a marvel or altera (iirc their name) design to be place into their dgx server and maybe server designs by partners.

 

And to be clear with what do I mean with full stack is basically produce the major silicon parts that go into a compute platform, intel has CPU, networking and FPGA accelerators in the market now, even storage but that is not very important to now since a third party storage solution can be as good here, but they are only missing GPU and it's coming very soon with Xe. Nvidia has GPU and now recently networking not FPGA but I feel they can sort of brute force their way into what an FPGA would be useful for with their GPU and CUDA, all that remains is a CPU and even though is not gonna be x86, ARM is starting to give both intel and AMD a run for its money especially with hyperscalers (see amazon graviton 2), Nvidia is gonna come full force with something in this space at some point. AMD for its part has CPU and GPU but not networking and FPGA, xilinx can provide FPGA and maybe with a bit of change also networking on the servers.

 

But even if AMD get xilinx they still need to pull a mayor effort for this to be worthwhile and it's IMO the part that they struggle more and that is software. Intel is combining all the software to develop for their silicon into the oneAPI stack, basically a huge sdk to work on with all hardware functions in all their silicon, this is what is gonna be used in the aurora supercomputer to leverage all the intel silicon that gonna be inside. Nvidia has CUDA for their GPU and just now they announced DOCA for their networking which is aiming to do what CUDA does for their GPU, and like I said the CPU are coming and I bet they are gonna have software for it once it come, so yeah AMD needs to have something better that what they do now and it's gonna be more important that ever if they bring xilinx into the fold to bring full stack solutions.

 

Both Intel and Nvidia see the future of compute into consolidated full stacks solutions, and compute is were big money is heading towards, AMD buying xilinx is not so much to diversify but to be competitive in the market, for amazing as EPYC is, supercomputers and hyperscalers and big compute needs is not gonna be enough if they want EPYC and radeon into as many servers as possible.

 

TL;DR: This is a play to be competitive in the future of computing, not something to simply diversify and expand on, this gonna be huge if the rumor holds.

[Doobeedoo]

Ooh that's quite the amount, we'll see what happens but yeah. Hopefully not doing anything too risky. 

[S w a t s o n]

I think Lisa is getting a little big for her britches here.

 

Does that seem like the expected reaction for taking Single Threaded crown when you own every other crown already? You now sell the best CPUs on the market objectively. You are rumoured for a big merger that would boost most other companies.

 

She overpriced Zen 3. Zen 2 was priced a bit higher than expected already, this "small" increase was too much. If she's planning to finance the purchase of Xilinx this way I really think she's doing it wrong. They can't afford it right now and she's pissing people off with the pricing, Intel is just going to price cut the 10850k and then why would you buy a 5800x other than pcie 4.0? No lets repeat the ATI acquisiton AND raise prices during a pandemic just because the first quarter will sell out because holiday/hype demand.

People saying shareholders wanted the price increase are wrong largely I bet.

[Fatih19]

15 minutes ago, S w a t s o n said:

I think Lisa is getting a little big for her britches here.

 

Does that seem like the expected reaction for taking Single Threaded crown when you own every other crown already? You now sell the best CPUs on the market objectively. You are rumoured for a big merger that would boost most other companies.

 

She overpriced Zen 3. Zen 2 was priced a bit higher than expected already, this "small" increase was too much. If she's planning to finance the purchase of Xilinx this way I really think she's doing it wrong. They can't afford it right now and she's pissing people off with the pricing, Intel is just going to price cut the 10850k and then why would you buy a 5800x other than pcie 4.0? No lets repeat the ATI acquisiton AND raise prices during a pandemic just because the first quarter will sell out because holiday/hype demand.

People saying shareholders wanted the price increase are wrong largely I bet.

I looked up their stock prices just after yesterday's announcement and I found it weird that their stocks prices are going down. I guess this is why.

[thorhammerz]

13 hours ago, themaniac said:

But can they really afford to spend $30billion right now?

Like NVDA's purchase of ARM, a deal of this size would likely only be partially paid-for in cash, with the rest being equity. With the equity market where it is, they gotta get while the going is good .