Chip maker AMD will buy competitor Xlinx for $35 billion in stock, the companies announced on 27 October.
AMD specializes in graphics and central processing chips, while Xlinx is a leader in field-programmable gate arrays, which can be programmed by users instead of by a manufacturer.
The news follows Nvidia’s September $40-billion purchase of Arm Holdings, a major British maker of smartphone chips. In July, Analog Devices paid $20 billion to buy Maxim Integrated Products, which makes chips for the automotive, industrial, and consumer markets.
Chip makers are merging for two reasons.
First, their market is fragmenting: instead of general-purpose computer chips, users require increasingly specialized chips designed to handle artificial intelligence, networking, and ever more sophisticated graphics, among other demands.
Second, companies need to address this growing range of demands while maintaining the size and scale needed to compete.
AMD’s purchase is seen as an attempt to capitalize on weaknesses at Intel, the leading U.S. chip company. Intel has been struggling with bugs in its manufacturing processes, while AMD rid itself of factories in 2010 and has its chip designs made by others.
Intel generated $71.9 billion in revenue in 2019, compared to AMD’s $6.7 billion.
AMD reported $2.8 billion in third-quarter sales, a 56-percent jump from a year earlier, thanks to the high demand for computers and video gaming equipment as people sheltered at home during the economic shutdown.
The figure was better than analysts had expected, as is the $3 billion in sales that AMD predicts for the current quarter.
Xlinx posted revenues of $767 million during the third quarter.
TRENDPOST: We also note this transaction to identify the growing merger and acquisition trend that will accelerate as the “Greatest Depression” worsens and more Bigs go bust. Across the globe, multinationals will grow larger, thus monopolizing market sectors.
