AMD Acquires Data Center Chip Company Pensando for $1.9 Billion

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Advanced Micro Devices Inc. today announced plans to acquire data center chip company Pensando Systems Inc. for an estimated $1.9 billion. The chip is part of an accelerator card that can be attached to servers in a data center. The card is capable of performing network functions, such as routing information from one server to another. It also contributes to cybersecurity thanks to its ability to encrypt data and implement firewall rules to block malicious network traffic.

Storage infrastructure management is another use case that Pensando is targeting. The company’s accelerator cards can compress data sets to reduce the storage capacity they require, apply encryption, and speed up the calculations needed to detect data errors.

Numerous of the computing tasks that Pensando hardware can perform were historically relegated to specialized devices. The company claims that its technology reduces the need for appliances, thereby reducing the complete number of systems running in a data center. This simplifies daily maintenance tasks for IT teams.

Pensando writes that increased network efficiency is another benefit of their technology. A server that relies on a device to perform computational tasks has to send data to the device for processing and then wait until the results come back. Pensando’s accelerator cards, on the other hand, connect directly to servers, allowing them to perform processing locally without the delay of sending data over the network to a separate device.

AMD revealed today, on the occasion of the acquisition, that Pensando has shipped more than 100,000 “Pensando platforms” to date. Microsoft Corp., Oracle Corp. and IBM Corp. are among the organizations using the startup’s technology.

The Pensando acquisition will help AMD expand its already rapidly growing data center business. Ultimate quarter, this business doubled its revenue year-over-year thanks, in part, to strong demand for AMD’s Epyc line of server processors.

In addition to creating a new source of revenue growth for AMD, Pensando’s technology could also help AMD compete more directly with NVIDIA in an increasingly important segment of the data center chip market. NVIDIA offers similar chips that can speed up tasks like data encryption and storage infrastructure management. Also, Intel Corp. entered the fray last year with its series of IPU chips.

AMD expects to total the acquisition by the end of the quarter. Upon completion of the transaction, Pensando will become part of AMD’s data center solutions group.

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