May 26, 2022

AMD is in the chip business, and most of it today is in large data centers. As you scale up, efficiency becomes paramount, and maximizing efficiency for a given workload becomes critical.

AMD today announced that it plans to acquire data center optimization startup Pensendo for approximately $1.9 billion. The company’s products include a programmable batch processor that manages workload movement across the hardware infrastructure, moving work away from the CPU where possible to improve performance. The company claims performance is 8 to 13 times faster than competing products from Nutanix, VMware, Cisco and others.

AMD President and CEO Lisa Su said the acquisition is designed to help data center operators reduce their cost of ownership by leveraging software that maximizes its use.

“Today, with the acquisition of Pensando, we are adding an industry-leading distributed services platform to our portfolio of high performance CPUs, GPUs, FPGAs and adaptive SoCs. The Pensando team has world-class experience and a proven track record of innovation at the chip, software and platform levels,” the company said in a statement.

Prem Jain, CEO and co-founder of Pensando, framed the deal in terms of the opportunity to grow within a larger organization faster than it could have been on its own. “Partnering with AMD will help accelerate the growth of our core businesses and expand our customer base in more markets,” he said. Jane will join the Data Center Solutions group at AMD when the deal closes.

Patrick Moorhead, founder and chief analyst at Moor Insight & Strategies, which closely monitors the chip industry, said this gives AMD a critical set of data center software tools. “Neural Processing Units (NPUs) and Infrastructure Processing Units (IPUs) offload the network so that the server can provide a consistent level of performance for applications. While the solution requires chips and cards, the structure is entirely software defined,” he explains.

Overall, Moorehead said it’s a good acquisition for AMD, giving the company an edge it lacked. “This is what brings AMD to the NPU or IPU market. It will compete with Intel, Nvidia and Marvel. Pensando has a very good selection of enterprise and cloud clients. I like it,” he said.

Launched in 2017, the company has raised over $300 million from the likes of Lightspeed Ventures, Qualcomm Ventures, and Hewlett Packard Enterprise, according to Crunchbase. Clients include Microsoft Azure, Oracle Cloud and Goldman Sachs.

According to AMD, the exact price of the deal will be determined when they determine Pensendo’s working capital and other adjustments. However, the deal is expected to close in the second quarter, subject to an overall regulatory review.

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