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April 4, 2022updated 05 Apr 2022 12:07pm

AMD buys Pensando to build its data centre stack

Chipmaker to pay $1.9bn for data processing unit (DPU) specialist favoured by cloud providers

By Matthew Gooding

AMD is paying $1.9bn for Pensando, a networking vendor which provides a distributed services platform for some of the biggest names in cloud computing. The acquisition reinforces the chipmaker’s focus on the lucrative data centre market, traditionally dominated by rival Intel.

AMD GPUs in a data centre in Romania. The company is building its presence in the server market. (Photo by Akos Stiller/Bloomberg via Getty Images)

“To build a leading-edge data centre with the best performance, security, flexibility and lowest total cost of ownership requires a wide range of compute engines,” said AMD CEO Dr Lisa Su. “The Pensando team brings world-class expertise and a proven track record of innovation at the chip, software and platform level which expands our ability to offer leadership solutions for our cloud, enterprise and edge customers.”

The deal, announced on Monday afternoon, is expected to close in the second quarter of this year, and will see the team at California-based Pensando join AMD’s Data Center Solutions Group.

What is Pensando?

Pensando was founded in 2017 by a quartet of former Cisco engineers. It emerged from stealth two years later having secured $278m in funding. It offers an Arm-based accelerator-type chipset, often referred to as a data processing unit (DPU), which handles some of the common networking tasks that underpin data centre operations, as well as a software platform which manages the allocation of these tasks to different machines. This, the company says, helps make data centres operate more efficiently.

Clients include investment bank Goldman Sachs, which was also an early investor in the business, while AMD’s announcement also states that Pensando technology is deployed in the data centres of Microsoft Azure, the second biggest public cloud provider, as well as Oracle Cloud and IBM Cloud. Amazon’s AWS, the public cloud market leader, has its own distributed services platform, AWS Nitro, which Pensando cites on its website as its chief competitor.

“In less than five years Pensando has assembled a best-in-class engineering team that are experts in building systems together with a rich, deep ecosystem of partners and customers who have currently deployed over 100,000 Pensando platforms into production,” said Pensando CEO Prem Jain. “Joining together with AMD will help accelerate growth in our core business and enable us to pursue a much larger customer base across more markets.”

AMD buys Pensando: why the acquisition makes sense

Under the leadership of Dr Su, AMD has been focused on growing its share of the server chip market, which in recent years has been completely dominated by Intel. And while it remains a long way behind its rival, it has enjoyed relatively rapid growth in recent years, going from less than 1% of the market in 2018 to 7.1% by the end of 2020.

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It has made in-roads with its EPYC processors which offer improved performance on their Intel rivals. The latest incarnations, Genoa and Bergamo, are set to launch this year and next. Genoa will use the 5nm production process, meaning it is likely to offer improved performance on its Intel equivalent, Sapphire Rapids, which is built on 10nm technology. Meta is one of a number of big-name tech companies deploying AMD chips in its data centres.

AMD also offers a range of GPUs for undertaking advanced workloads such as AI, and adding Pensando's orchestration platform provides another layer to the company's server stack. The company does not break out data centre revenue, but the company's 2021 financial results show that its computing and graphics division, which includes data centre income, delivered income of $9.3bn over the year, up from $6.4bn in 2020.

As part of the announcement, Dr Su said data centre revenue had "doubled year-over-year", driven "by growing adoption of AMD EPYC processors across cloud and enterprise customers." She added: "We expect another year of significant growth in 2022 as we ramp our current portfolio and launch our next generation of PC, gaming and data centre products.”

Read more: AI is no silver bullet for the data centre skills shortage

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