Advanced Micro Devices<span class="company-name-type"> Inc.</span> AMD <span>-0.21%</span> Rival chipmaker is in advanced talks to buy Xilinx<span class="company-name-type"> Inc.</span> XLNX <span>0.15%</span> According to people familiar with the matter, in a deal that could cost more than $ 30 billion and mark the latest major alliances in the rapidly consolidating semiconductor industry.
The companies are discussing a deal that could come together as early as next week, people said. There is no guarantee that they will arrive there, especially given that according to some, the talks had stalled before the recent start.
The surge in AMD shares could prompt the company to make acquisitions using its stock as a currency. Xilinx has a market value of about $ 26 billion, with its shares rising nearly 9% so far this year, ahead of the S & P 500’s 7% gain.
With a typical acquisition premium, a deal would cost the company more than $ 30 billion.
AMD is based in Santa Clara, California, headed by Chief Executive Lisa Su. In addition to desktop and notebook computers, it makes components used in gaming systems such as Xbox and PlayStation that have been in high demand for the epidemic as it forces people to stay home. It has a growing data-center-processor business that outpaces Intel’s rivals Corp.
, Has been a major player in that segment for a long time.
In addition to Xilinx led by CEO Victor Peng, AMD will be ranked even more competitive with Intel and give it a larger position in the fast-growing telecommunications and defense markets.
San Jose, California. Xilinx’s chips are used in wireless communications, data centers, and industries such as automotive and aerospace. Its tensions have been hurt by trade tensions between the US and China, and the Trump administration’s limitations on shipments for China’s Huawei Technologies company due to security concerns. Analysts estimate that Huawei accounts for about 6% to 8% of Xilinx’s revenue.
Xilinx creates microchips called field-programmable gate arrays or FPGAs. Unlike standard chips, they can be remade after being produced. This makes them valuable in rapid prototyping and in rapidly emerging technologies where there is not enough time to go through the years of development process required for other chips.
FPGAs are typically used in the new Superfast 5G telecommunications infrastructure, although they may be replaced later by standard chips as the technology matures more. They are also often used in military communications and radar systems.
Intel is the second major player in the FPGA market, having launched Altera Corp. in 2015. Has acquired its business by acquiring
AMD, which specializes in central processing units that serve as the digital brains of computers, has been gaining stakes over Intel in recent years, releasing new generations of processors that outnumber their larger rivals on multiple performance benchmarks Beat or beat According to Mercury Research, AMD had about 20% share in the personal computer CPU, which according to Mercury Research, was about 8% three years ago.
Consolidation has swept through the semiconductor industry as chipmakers seek mass and expand their product portfolio to support the growing number of everyday items connected to the Internet. For one, Xilinx has considered a number of potential tie-ups in recent years, which did not succeed.
According to data from Dealoga, AMD and Xilinx should reach an agreement, which would be three of the biggest deals in the semiconductor industry so far. Analog device Inc.
In July, Maxim agreed to pay more than $ 20 billion for integrated products Inc.
And nvidia Corp.
In September, British chip designers backed by SoftBank Group agreed to pay $ 40 billion for Arm Holdings Corp.
The merger-and-acquisition activity in general recorded a fall in 2020 as a result of the pandemic, with global and US volumes declining by 18% and 40%, respectively. Recently, however, it has shown signs of life as companies gain confidence to make big strategic steps. Next energy Inc.
Recently contacted Duke Energy Corp.
With a takeover proposal that would likely value the North Carolina utility at more than $ 60 billion and count as the biggest deal of the year.
That activity has confused predictions that dealmakers from the upcoming election will have to sit on their hands and wait with clarity as to what kind of administration might be called shots for the next four years.
—This article contributes a Fitch.
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