Advanced Micro Devices Inc. reportedly plans to acquire rival chipmaker Xilinx Inc. in a deal that could be valued at more than $30 billion.

The Wall Street Journal reported late today that AMD is in advanced talks to buy Xilinx, and that the deal could be concluded as soon as next week. Still, there’s no guarantee that the deal will be concluded, since the talks had previously stalled before restarting, the Journal’s anonymous sources said.

AMD, which is led by Chief Executive Lisa Su (pictured), is said to be interested in buying Xilinx thanks to the smaller firm’s strong presence in the fast-growing telecommunications and defense markets. Xilinx, which is based in San Jose, California, makes specialized computer chips called field-programmable gate arrays that are used in wireless communications, data centers and the automotive and aerospace industries.

Unlike regular computer chips, FPGAs can be reprogrammed after they’ve been built. That makes them more useful for tasks such as rapid prototyping and in fast-emerging technologies where companies don’t have time to waste developing processors for a specific use case.

The Journal said Xilinx’s FPGAs are a key ingredient of new 5G network deployments, though they may eventually be replaced by more standardized chips once that technology matures.

AMD is more focused on making standard chips that are used in personal computers, data centers and games consoles. The company has been on a tear of late, its stock rising 89% this year due to the COVID-19 pandemic, which has led to much greater demand for its products.

The Journal said AMD might be tempted to use its growing stock price as currency in order to acquire Xilinx, in order to compete more effectively with its main rival Intel Corp., which also manufactures FPGAs.

“Given AMD’s valuation, it needs to broaden its market opportunity, and buying Xilinx could get into carrier infrastructure, automotive and aerospace and expand its data center presence,” said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy.

Xilinx could be persuaded by the offer, since it hasn’t done quite as well as other chipmakers this year. Although its stock is up 9% in 2020, it has been hurt by trade tensions between the U.S. and China, in particular the sanctions placed on Huawei Technologies Co. Ltd. Huawei is one of Xilinx’s major customers, accounting for 6% to 8% of its revenue, the Journal said.

Xilinx currently has a market value of $26 million, but with AMD likely to pay a premium, any deal would be valued at closer to $30 million, the Journal said.

The semiconductor industry has experienced a wave of consolidation in recent years as the bigger players look to expand their product portfolios and enter new markets. Last month, Nvidia Corp. said it was paying $40 billion to acquire the British chip design firm Arm Ltd., while in July, Analog Devices Inc. said it would pay more than $20 billion to acquire Maxim Integrated Products Inc.

Last year saw two multibillion-dollar semiconductor acquisitions, with Germany’s Infineon Technologies AG paying $9.4 billion for Cypress Semiconductor Corp., and Marvell Technology Group Ltd. buying Cavium Ltd. for $6 billion. And last month, Nvidia Corp. announced plans to buy chip designer Arm Holdings Ltd. for $40 billion.

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE the silicon chip business is transitioning as its bigger players moved away from a focus on one kind of architecture to selling a suite of different chips. He said more complex computer architectures and a desire to own complete systems are the main forces driving this consolidation.

“AMD buying Xilinx fits into that picture and would give it a substantial expansion to its chip portfolio,” Mueller said.

Photo: AMD Global/Flickr