According to a Wall Street Journal report, AMD is in advanced talks to acquire rival chipmaker Xilinx. The On the Move Yahoo Finance panel discusses.
ADAM SHAPIRO: Welcome back to "On the Move." We're watching shares of Xilinx go up about 12%. Last year, 2019, we saw a lot of movement in semiconductor mergers. Broadcom $10.7 billion acquisition of Symantec. This just continues this year, because now AMD reportedly in talks to acquire Xilinx in a deal that could value the company combined at $30 billion. Akiko Fujita, what are we witnessing here?
AKIKO FUJITA: Yeah. I mean, AMD has just been on an incredible run this year. When you think about the digital acceleration that has happened as a result of the pandemic, AMD has been a key beneficiary on that. You look at the shares, up 89% so far.
So from a timing standpoint, this is one that certainly makes sense. We have seen increasingly a lot of these semiconductor companies looking to expand scale, but also expand the offerings that they have. And so when you look at what Xilinx offers, they've got chips for data centers, wireless communications, automotive. Certainly a lot of areas that would allow AMD to add to their portfolio and really get on par with where Intel is.
You noted just the activity that we have seen in this space. Bloomberg had this number tallying up all the deals so far, $74 billion. And we're coming off of that big announcement from Nvidia Their announcement to acquire Arm over in the UK as well.
One thing I think it is important to note here, in terms of Xilinx, they have really struggled as a result of the US crackdown on Huawei. They're one of those companies that had been selling to Huawei more significantly than other American companies. 6-8% of the revenue came from there. So from their standpoint, this may be one that makes sense in this timing, as well as the space becomes increasingly competitive.
DANIEL ROBERTS: And guys, let me just add in there. I see this as really the response to Nvidia and Arm. As Akiko mentioned, we've seen so much consolidation in this space, but I feel like that was a big salvo and this is really AMD's response.
Now, by the way, let's also mention, and I feel like it's something we don't actually talk about so much on our show. I understand why, but during the pandemic, gaming has been surging in so many ways and that has really helped these chip names.
By the way, remember two years ago when chips were really the big movers in the market. I mean, we talked about chip stocks like every day. That kind of softened for a while, and now here we are again with all this consolidation.
So I sort of see this as AMD's response to the Nvidia-Arm deal, even though there's been, of course, a few examples recently.