AMD In Late-Stage Talks To Buy Xilinx In $30 Billion Microchip Megadeal

As the Trump Administration wages economic war against China’s semiconductor industry, the wave of rapid corporate consolidation continues, as US-based chpmaking giant AMD is reportedly in late-stage talks to buy San Jose-based Xilinx in a deal that would, according to WSJ, create a $30 billion chip giant that could more easily take on Intel.

If completed, the deal would give AMD more of the pieces needed to break Intel’s stranglehold on the profitable market for data-center computer component. This is only the latest in a string of troubling developments for Intel, which recently lost a major customer when Apple decided to start making more of its own chips.

AMD makes chips for PCs, gaming systems and other devices, but Intel has long been the leader in the coveted market for data-center processor chips. But the deal would help transform AMD into a challenger to be taken seriously. The deal would also give AMD a bigger footprint in the fast-growing defense and telecoms markets. Xilinx’s chips are used in industries from defense to aerospace, wireless communications and data centers.

Xilinx also makes chips called field-programmable gate arrays, or FPGAs, which, unlike normal microchips, can be reprogrammed after they leave the foundry, which makes them a valuable tool for prototyping and work in fast-emerging technologies where there isn’t time to wait for years to develop and produce new chips. Intel is the only other major player in the FPGA space, though it also built its business by acquiring Altera Corp in 2015.

According to WSJ, the surge in AMD shares – they’re up a staggering 89% so far this year – has enabled AMD to use its stock as currency for more acquisitions.

Xilinx shares soared after the close yesterday on the news. If a deal is struck, it would mean three of the year’s biggest deals would all be in the chip space: three of the year’s largest deals so far would be in the semiconductor industry, including the “largest semiconductor deal ever” – the sale of Softbank-owned Arm Holdings to Nvidia for more than $40 billion.

Back in July, Analog Devices agreed to pay more than $20 billion for Maxim Integrated Products.

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