NEW YORK: AMD is buying server maker ZT Systems in a cash-and-stock deal worth USD 4.9 billion as the chipmaker strengthens its artificial intelligence capacity in its efforts to compete with Nvidia.

AMD plans to sell its server manufacturing business after the deal closes, with mergers and acquisitions in tech and elsewhere getting a closer look by the Biden Administration.

ZT Systems, based in Secaucus, New Jersey, is a privately held company that has designed and rolled out data centre and storage infrastructure systems to cloud companies for more than a decade.

The transaction includes a contingent payment of up to USD 400 million based on post-closing milestones.

Once the deal closes, ZT Systems will join the AMD Data Centre Solutions Business Group. AMD said Monday that it will look for a buyer for its US-based data centre infrastructure manufacturing business.

The transaction, which was approved by AMD's board, is expected to close in the first half of next year.

Shares of AMD, based in Santa Clara, Calif., rose more than 2 per cent before the market opened.