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AMD, the chipmaker, plans to acquire one of their rivals Xilinx in a deal that might hit the $30 billion mark. Yesterday, the Wall Street Journal reported that AMD is in the advanced talks stage and that the deal could be done by next week.

However, there is no guarantee that the deal will go through since there have been starts and stops before regarding this particular deal.

Lisa Su, who is the CEO of AMD, is interested in buying Xilinx, as the smaller firm is growing quickly in the telecom and defense markets.

The Xilinx edge

Xilinx is based in San Jose, California, specializing in making special computer chips called field-programmable gate arrays (FPGA) used in wireless communications, automotive and airspace industries, and data centers. 

Unlike typical computer chips, the FPGAs are reprogrammable after they have been manufactured. They are used in tasks like rapid prototyping and fast-emerging technologies where timelines to develop processors for specific uses are done quickly. 

The Wall Street Journal says that the FPGAs will be the main ingredient in the deployment of 5G. However, the possibility that they will be replaced by something else is not too far-fetched.

Consolidation galore

AMD’s valuation is high, and they need to broaden their presence in the market. Buying Xilinx might help the company get more into the data center industry. Xilinx might be persuaded to sell because they have not been doing well this year.

Although the company’s stock is up 9% this year, the trade tensions between the US and China have hurt sales numbers because Huawei is one of Xilinx’s biggest customers.

The semiconductor industry is undergoing considerable consolidation in recent years as the big players expand their presence. Nvidia is paying $40 billion to acquire Arm, and Analog Devices is spending more than $20 billion to acquire Maxim Integrated Products.

Also read: Why the acquisition of ARM by Nvidia should be prohibited