Proposed Acquisition of Shares of ZT Group Int’l, Inc. by Advanced Micro Devices, Inc.

Notifying Party:

Advanced Micro Devices, Inc. and ZT Group Int’l, Inc.

Notifying Date:

22 November 2024

Summary of transaction:

a.            the names of the merger parties;

(a)          Advanced Micro Devices, Inc. (“AMD”); and

(b)          ZT Group Int’l, Inc.(“ZT”).

b.            a description of the transaction;

The notification relates to the proposed acquisition by AMD of 100 per cent. of the shares in ZT (the “Proposed Transaction”).

c.            a description of the business activities of the merger parties worldwide and in Singapore;

AMD

AMD is a fabless global semiconductor company that develops computer processors and related technologies. As part of its data centre business segment, AMD supplies semiconductor devices globally for use in data centres, including the following: central processing units (“CPUs”); discrete graphics processing units (“GPUs”); field programmable gate arrays (“FPGAs”); and Smart Network Interface Cards (“SmartNICs”). AMD’s Singapore facility is a product development centre that conducts R&D activities for pre- and post-silicon development. AMD offers all products globally, including to customers in Singapore.

ZT

ZT is an original design manufacturer (“ODM”) of server and storage solutions for data centres. It has design, engineering, and manufacturing capabilities, principally located in the US. ZT’s data centre business comprises of server design and engineering, server manufacturing and related services (including test, integration and support services). ZT helps its customers, which are primarily large-scale data centres (known as hyperscalers) build customised server solutions. ZT provides server integration activities in Singapore. ZT offers all services globally, including to customers in Singapore.

d.            a description of the overlapping goods or services, including brand names;

The Parties do not offer any overlapping goods or services. However, there is a vertical relationship between the Parties’ products in that AMD is active in the upstream supply of semiconductor products for data centre servers, and ZT is active in the downstream supply of data centre servers.

e.            a description of substitute goods or services from demand-side and supply-side considerations;

For the supply of semiconductor products for data centre servers, similar products offered by competitors of AMD would be considered close substitutes from both a demand- and supply-side perspective.

For the supply of data centre servers, similar services offered by competitors of ZT would be considered close substitutes from both a demand- and supply-side perspective.

f.            the applicant’s views on:

i.             definition of the relevant market(s);

The Parties do not offer any overlapping goods or services, but there is a vertical relationship in the products of the Parties. AMD is active in the upstream supply of semiconductor products for data centre servers, and ZT is active in the downstream supply of data centre servers.

For the purposes of assessing the Proposed Transaction, the Parties submit that the relevant product market for the upstream supply of semiconductor products for data centre servers can be potentially further segmented into the following product type(s) supplied by AMD: (a) Server CPUs; (b) Data centre discrete GPUs; (c) Data centre SmartNICs; and (d) Data centre FPGAs. For the downstream market in which ZT is active, the Parties submit that the relevant product market is the supply of data centre servers.

ii.            the way in which competition functions in this market;

For the upstream relevant markets, suppliers of semiconductor products compete on the basis of product differentiation and are constantly innovating to offer new and improved products. The main factors which suppliers compete on are price, functionality, performance, and power consumption. Customers typically base their decision to purchase semiconductor products from a given supplier on a combination of factors, such as the intended application of the device, the scope and scale of the device’s intended use, the performance needs of the device, and price. Brand loyalty is generally not an important factor.

For the downstream relevant market, operators of data centres select providers of data centre servers based on a variety of factors, including total cost, ability to meet project timelines/reliability/deliverability, relevant expertise/past history of performance, robust design, quality, and ease of doing business.

iii.           barriers to entry and countervailing buyer power; and

The Parties submit that for the upstream supply of semiconductor products for data centre servers:

(a)          there are no prohibitive factors that serve as barriers to entry for any of the products or services AMD sells, either in Singapore or globally; and

(b)          customers of AMD have strong countervailing buyer power, given that the customer base of AMD is concentrated and consists of a number of large global customers.

The Parties also submit that for the downstream supply of data centre servers:

(a)          there are no insurmountable barriers for new entrants to start to offer server design and manufacturing services; and

(b)          customers of ZT have strong countervailing buyer power as they own the design files for ZT’s server solutions and contracts for the rights to use any resulting design to manufacture at another ODM.

iv.           the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).

Coordinated and non-coordinated effects

The Parties submit that the Proposed Transaction will not result in any coordinated or non-coordinated effects as there are no horizontal overlaps between them.

Vertical effects

The Parties submit that the vertical link between them will not give rise to competition concerns at a global level (and even less so in Singapore). The merged entity will have no ability or incentive to engage in anti-competitive customer or input foreclosure.

 Decision:

6 January 2025

Following its assessment, CCCS has concluded that the Proposed Transaction, if carried into effect, will not infringe the section 54 prohibition of the Competition Act 2004.

Read the Media Release.

Read the Grounds of Decision.