According to sources close to the companies, Advanced Micro Devices (AMD) Inc. is in advanced discussions to buy Xilinx (XLNX) Inc. in a takeover that could be valued at $30 billion. AMD who is a major shareholder in the semiconductor marker is planning to acquire Xilinx and the negotiations are said to be in advanced stages of negotiation, with a potential deal emerging as early as next week.
The $30 billion dollar deal will mark the latest big tie-up in the rapidly consolidating semiconductor industry. Acquiring Xilinx, which makes programmable chips for wireless networks, would also help AMD expand into a new market just as telecommunications carriers spend billions to build fifth-generation, or 5G, networks.
According to the sources, the companies are discussing a deal that could come together as soon as next week. This is another acquisition in the chip industry this year, following Nvidia’s proposed $40 billion purchase of Arm. With both possible acquisitions, the value of pending or completed semiconductor deals in 2020 would top $100 billion, the highest in at least 10 years, according to data by Bloomberg.
AMD may be trying to keep up with NVIDIA by acquiring Xilinx. NVIDIA entered into a definitive agreement with the Japanese behemoth, SoftBank, to acquire ARM for $40 billion earlier this year. ARM designs silicon chips and licenses instruction sets that govern how chips communicate. Moreover, ARM’s intellectual property includes the company’s Reduced Instruction Set Computing (RISC) Instruction Set Architecture (ISA), which is utilized by Apple, Qualcomm, Samsung, Huawei, etc. for their smartphone chips, thereby, corresponding to a market coverage of around 90 percent.
AMD’s acquisition of Xilinx will also allow them to compete with Intel who has a big hold in the data-center market. However, the acquisition may take a while as the approval of chip-industry transactions has been complicated by the ongoing trade war between China and the U.S. We will have to wait and see how this deal progresses.
