AMD is in advanced talks to buy Xilinx for as much as $30 billion, according to unnamed sources that spoke to The Wall Street Journal late Thursday. Neither company would comment.
The news caused Xilinx shares to soar, increasing by more than 13% shortly after markets opened on Friday.
Both companies had already seen their shares increase this year during COVID-19, but AMD has seen the bigger increase of 89% with greater demand for PCs and other devices that use its chips during work from home and learning from home.
AMD’s second quarter revenue reached $1.9 billion, up by 26%, with net income rising by four times with record notebook and server processor sales. AMD’s total market value is now more than $100 billion, while Xilinx’s total value is $26 billion. On Friday opening, AMD shares traded at $84.75, down from $86.51 at Thursday's close, while Xilinx shares opened Friday at $122.56 compared to $105.99 at the previous close , an increase of 15.6% that slowed to 13% shortly afterwards.
Investors and analysts believe that an acquisition of Xilinx would make AMD more competitive with Intel, the largest chipmaker in the world, especially in telecom and defense market sales. Neither company is in the top 10 of companies that design and manufacture processors and other chips, but a combined entity would be much closer to Intel’s broad reach.
Xilinx invented the FPGA in the early 1980s, and their ability to be reprogrammed makes them ideal for use in fast development of artificial intelligence applications being used in self-driving cars, robots and even satellites.
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Field programmable gate arrays (FPGAs) are also used in 5G infrastructure. Intel is the only other significant player in the FPGA market after buying Altera in 2015.
In recent quarters, Xilinx has seen the impact of the U.S. trade embargo on sales to Huawei, which normally make up as much as 8% of Xilinx revenues.
AMD has about 20% of the personal computer CPU market, nearly triple its market share of four years ago, analysts have noted. On Thursday, AMD launched its AMD Ryzen 5000 desktop processor, calling it the fastest gaming CPU available with a 19% increase in instructions per cycle.
The semi industry has seen increased merger activity in 2020, with Nvidia announcing in September a plan to pay $40 billion for Arm, a chip designer owned by SoftBank. Analog Devices said it would pay $20 billion for Maxim Integrated Product in July.
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