(Reuters) – Chip designer Advanced Micro Devices said on Monday it will acquire cloud startup Pensando for $1.9 billion to strengthen its data center products and capitalize on growing demand in the cloud and enterprise sectors.
AMD said the deal value does not include working capital and other adjustments.
Pensando, which was founded in 2017 by a group of four former Cisco Systems Inc. engineers, counts Goldman Sachs and Microsoft Corp’s cloud arm Azure as its customers.
The startup builds fully programmable processors and a software platform to help enterprise clients and data center customers operate more like cloud computing data centers, such as Amazon’s Web Services.
In cloud computing, customers can order as much computing power as they need in different parts of the world with a few mouse clicks. The software takes care of the mechanics of shuffling the data into the correct physical machines.
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The lucrative data center chip business is rife with competition with AMD rivals Intel Corp. and Nvidia Corp.
Just last month, Nvidia released a new chip to speed up artificial intelligence tasks in data centers.
The deal, which will enable AMD to add Pensendo’s platform to its line of processors and graphics chips, is expected to close in the second quarter of this year.
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Pensando CEO Prem Jain and the entire team will join AMD’s Data Center Solutions group.
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