Military Embedded Systems

FPGA leader Xilinx to be acquired by AMD for $35 billion


October 30, 2020

FPGA leader Xilinx to be acquired by AMD for $35 billion

SILICON VALLEY, Calif. Xilinx, a provider of FPGAs for military applications such as electronic warfare (EW), radar, communications, software defined radio (SDR), etc., has entered into a definitive agreement with AMD for AMD to acquire Xilinx in an all-stock transaction valued at $35 billion.

Xilinx FPGAs are common items on embedded signal processing solutions for EW and radar platforms. Xilinx's RFSoC family -- Xilinx Zynq UltraScale+ has significantly improved military EW and radar designs by getting signal-processing functionality next to the sensor.

Xilinx gained a good deal of market share in this area after AMD-compteitor Intel acquiired FPGA-provider Altera -- Xilinx's main xompetitor -- at the end of 2015 as that acquisition and the length of time associated with absorbing Altera into Intel slowed Altera product releases such as the Stratix 10. As a result Xilinx gained substnatial inroads into EW and radar signal processing designs, especially after the release of the RFSoC. It remains to be seen if similar delays will happen with AMD's acqusition of Xilinx.

Acquisition detials

The transaction is expected to be immediately accretive to AMD margins, EPS, and free cash flow generation, according to a Xilinx release. IT is a stock transaction with a combined enterprise value of approximately $135 billion.

“Our leading FPGAs, Adaptive SoCs, accelerator and SmartNIC solutions enable innovation from the cloud, to the edge and end device,” says Victor Peng, Xilinx president and CEO. “Joining together with AMD will help accelerate growth in our data center business and enable us to pursue a broader customer base across more markets.”Once the acqusition is complete AMD will be able to boast an offering that incudles CPUs, GPUs, FPGAs, Adaptive SoCs and software expertise in amrket segments like data centers, gaming, PCs, communications, automotive, industrial, aerospace, and defense.

 “Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world,” says AMD President and CEO Dr. Lisa Su. “This is truly a compelling combination that will create significant value for all stakeholders, including AMD and Xilinx shareholders who will benefit from the future growth and upside potential of the combined company. With a combined team of 13,000 talented engineers and over $2.7 billion of annual R&D investment, AMD will have additional talent and scale to deliver an even stronger set of products and domain-specific solutions."

Under the terms of the agreement, Xilinx stockholders will receive a fixed exchange ratio of 1.7234 shares of AMD common stock for each share of Xilinx common stock they hold at the closing of the transaction, according to the Xilinx release. Based on the exchange ratio, this represents approximately $143 per share of Xilinx common stock. Post-closing, current AMD stockholders will own approximately 74 percent of the combined company on a fully diluted basis, while Xilinx stockholders will own approximately 26 percent. The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

AMD expects to achieve operational efficiencies of approximately $300 million within 18 months of closing the transaction, primarily based on synergies in costs of goods sold, shared infrastructure and through streamlining common areas.  

The transaction has been unanimously approved by the AMD and Xilinx Boards of Directors, according to the Xilinx release. However, the deal is still subject to approval by AMD and Xilinx shareholders, certain regulatory approvals and other customary closing conditions. The transaction is currently expected to close by the end of calendar year 2021. Until close, the parties remain separate, independent companies.

AMD's Su will lead the combined company as CEO while  Peng, will join AMD as president responsible for the Xilinx business and strategic growth initiatives, once the transaction si closed. In addition, at least two Xilinx directors will join the AMD Board of Directors upon closing.

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