AMD is in the chip business and much of it today involves operating in data centers on a massive scale. As scale increases, efficiency becomes paramount and it becomes critical to maximize efficiency for specific workloads.
AMD announced today that it plans to acquire Pensando, a data center optimization startup, for approximately $1.9 billion. The company’s products include a programmable package processor that manages how workloads move through the hardware infrastructure, moving work away from the CPU where possible to improve performance. The company claims between 8x and 13x better performance than competing products from companies like Nutanix, VMware, Cisco and others.
AMD Chairman and CEO Lisa Su said the acquisition is about helping data center operators lower cost of ownership by using software to squeeze every last bit of efficiency out of it.
“Today, with our acquisition of Pensando, we are adding a leading distributed services platform to our high-performance CPU, GPU, FPGA and adaptive SoC portfolio. The Pensando team brings world-class expertise and a proven track record of innovation at the chip, software and platform level,” she said in a statement.
Pensando CEO and co-founder Prem Jain nailed the deal in terms of being able to grow faster within the larger organization than it could on its own. “Partnering with AMD will help accelerate growth in our core businesses and enable us to pursue a much larger customer base in more markets,” he said. Jain will join the data center solutions group at AMD when the deal closes.
Patrick Moorhead, founder and principal analyst at Moor Insight & Strategies, which closely monitors the chip industry, said this gives AMD an important set of software tooling in data centers. “Neural Processing Units (NPUs) and Infrastructure Processing Unit (IPUs) perform network offload so that the server can provide a consistent level of performance for applications. While the solution requires chips and cards, the framework is fully software-defined,” he explains.
Overall, Moorhead said it’s a good acquisition for AMD, giving the company the capabilities it lacked. “This is what brings AMD into the NPU or IPU market. It will compete with Intel, Nvidia and Marvell. Pensando has a very good range of enterprise and cloud clients. I like it,” he said.
Launched in 2017, the company has raised more than $300 million from companies like Lightspeed Ventures, Qualcomm Ventures and Hewlett Packard Enterprise, according to Crunchbase data. Customers include Microsoft Azure, Oracle Cloud and Goldman Sachs.
The exact price of this deal will be worked out, according to AMD, when they determine Pensando’s working capital and other adjustments. Nevertheless, the deal is expected to close in the second quarter, subject to customary regulatory review.