New Jersey-based server maker ZT Systems has acquired Advanced Micro Devices

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Semiconductor company Advanced Micro Devices is buying Secaucus-based server maker ZT Systems in a deal that includes cash and stock and is valued at $4.9 billion.

The move is part of AMD’s efforts to compete with graphics card maker Nvidia and expand its offering of AI-powered hardware.

Under the plan, AMB will buy 75% of ZT Systems in cash and the remaining 25% in stock, according to an announcement Monday, subject to a down payment of $400 million.

“Our acquisition of ZT Systems is another important step in our long-term AI strategy,” said Lusa Su, AMD president and CEO.

According to Su, the Hudson County-based company “has gained expertise in designing world-class systems and rack-scale solutions, which will significantly strengthen our data center AI systems and customer service capabilities.”

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The availability of such integrated circuits has become particularly important due to the rapid development of artificial intelligence technologies in recent years.

“AI chips increase speed and efficiency (i.e., they can perform more calculations per unit of energy used) by incorporating vast numbers of increasingly smaller transistors that operate faster and use less power than larger transistors,” reads the Center for Security and Emerging Technologies at Georgetown University.

“But unlike CPUs, AI chips also have other AI-optimized design features,” the post reads. “These features dramatically speed up the identical, predictable, independent computations required by AI algorithms.”

According to Bloomberg News, ZT had sales of $10 billion last year, mostly from manufacturing, and had a 22% share of the market for graphics-equipped servers.

Once the deal is completed — expected in the first half of 2025 — AMD will spin off its own server business and sell it so as not to compete with companies like Super Micro Computer, Reuters reports.

Reuters reported that ZT currently employs 2,500 people, of which 1,000 engineers will be retained.

Daniel Munoz covers business, consumer affairs, jobs and the economy for NorthJersey.com and The Record.

E-mail: [email protected]; Twitter:@danielmunoz100 and Facebook