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As the serverAIThe times are becoming more important.AMDWith the acquisition of the "AI server leader" ZT Systems at $4.9 billion, the server market landscape may be reshaped.

JPMorgan Chase said in a report on Tuesday:ZT's strong capabilities in design and services can help promote the deployment of AMD AI servers in data centers.NvidiaHyperscale computing companies may be encouraged to outsource Nvidia AI servers to other ODMs besides ZT, which may lead to a more concentrated market competition landscape.

AMD announced yesterday that it would pay $4.9 billion to acquire server system integrator ZT Systems. ZT Systems has strong capabilities and abundant engineering resources (about 2,500 employees) in manufacturing, design and services. ZT now ships hundreds of thousands of servers every year. Major customers includeMicrosoftandAmazonEtc. More importantly, ZT has a leading market share in NVIDIA's Hopper series and AMD's MI300 servers.

AMD expects to close the transaction in the first half of 2025 and plans to sell the manufacturing business to a strategic buyer.This acquisition demonstrates the importance of ODM in AI servers, especially in design and system integration, and the server market landscape may be reshaped.

For AMD, ZT's strong capabilities in design and services can help promote the deployment of AMD AI servers in data centers.

AI server system architecture is becoming increasingly complex, and the deployment cycle from silicon samples to rack systems is getting longer and longer. Nvidia's AI server product testing time is 1-3 quarters, and considering its special hardware structure, AMD's solution may take longer.

Often, silicon vendors are able to accelerate the learning curve by anchoring their customers’ needs.With this acquisition, we believe AMD can leverage ZT Systems’ extensive experience and engineering resources in design and services to improve system integration through better reference designs and shorten the time to deploy servers for customers.

The impact on the ODM (server market) landscape is complex:

AMD’s acquisition of ZT Systems highlights the central role of ODMs in building AI infrastructure.Nvidia could encourage hyperscale computing companies to outsource Nvidia-based AI servers to other ODMs besides ZT Systems, which could lead to a more concentrated competitive landscape.It is beneficial to Taiwan AI server ODMs.

Positive impact on Quanta/Foxconn:ZT Systems has been Quanta's main competitor in Microsoft's AI server project. This acquisition is positive for Quanta's market share in the AI ​​server field, especially Microsoft's AI server. At the same time, Hon Hai also sees more opportunities in HGX servers.

Slightly positive impact on Wiwynn Technology, neutral on Wistron:Wiwynn Technology's stock price once rose due to ZT Systems' entryMetaThe deal may ease market concerns about Wiwynn Technology as the company's AI server supply chain has declined. However, Wiwynn Technology may face more intense competition in AMD's server business. On the other hand, given that ZT Systems' manufacturing business will be stopped, AMD's possibility of internalizing OAM/UBB manufacturing business is limited. I think this event is neutral for Wistron.

Negative impact on Inventec (Taiwanese server manufacturer):Inventec designs, manufactures and supplies servers to US cloud service providers (CSPs) through ZT SystemsCPUThe mainboard is the motherboard, and ZT Systems is responsible for system integration. Although Inventec may gain from ZT's shareholding, we believe this transaction is unfavorable for Inventec due to the increased business uncertainty related to ZT Systems. ZT may change its practice of outsourcing AI server orders to Inventec. If Inventec acquires ZT's manufacturing facilities, the company may expand production capacity and directly reach end customers. However, this may require new investments in system design and service support, which have been key factors in ZT's winning design orders in the past few years.