Chip designer Advanced Micro Devices (AMD.O) will buy cloud computing startup Pensando for $1.9 billion to upgrade data centers amid growing cloud demand.
AMD said the transaction value did not include working capital and other adjustments. Pensando was founded in 2017 by four former Cisco Systems Inc (CSCO.O) engineers and clients including the cloud units Goldman Sachs (GS.N) and Microsoft Corp (MSFT.O) Azure.
The startup builds fully programmable processors and software platforms that help enterprise clients and data center customers run cloud computing data centers such as Amazon Web Services (AMZN.O).
In the cloud business, customers can order the computing power they need in different parts of the world with just a few mouse clicks. The software is responsible for handling the data tampering mechanism to the proper physical machine.
The lucrative data center chip business is full of stiff competition, such as with AMD Intel Corp (INTC.O) and Nvidia Corp. Just last month, Nvidia released a new chip to accelerate artificial intelligence capabilities in data centers.
The deal, which allows AMD to add the Pensando platform to its lineup of processors and graphics chips, is expected to be finalized in the second quarter of this year.
Pensando CEO Prem Jain and the rest of the team will join AMD's Data Center Solutions Group.
On the other hand, TSMC, short for Taiwan Semiconductor Manufacturing Company, is by far the largest chipmaker in the world. It is also the sixth largest company in the world by market capitalization, with a market value of more than $600 billion, and provides chips for companies such as Apple, Intel, and Nvidia.
TSMC and Samsung are the only companies capable of producing today's most advanced 5-nanometer chips for iPhones. However, the Taiwanese company goes a step further, planning to manufacture 3nm chips by 2022, offering the most advanced technology.
Other companies on the list include China's largest chipmaker SMIC, one of 60 Chinese companies blacklisted by the United States in 2020. At the country level, Taiwan accounts for 63% of the market, followed by South Korea with 18%. In both countries, most of the market share is owned by one company.
With the adoption of 5G devices and other new technologies, the demand for chips will be very high and in high demand.
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