China’s State Administration for Market Regulation has conditionally approved Advanced Micro Devices Inc.’s proposed $35 billion acquisition of Xilinx Inc., Reuters reported today.

San Jose, California-based Xilinx is a leading provider of field-programmable gate array, or FPGA, processors. FGPAs are a type of versatile processor that can be customized to perform many different computing tasks. Xilinx’s FPGAs power a variety of devices ranging from data center servers to smart cars. 

The State Administration for Market Regulation approved AMD’s acquisition of Xilinx on condition that the company meets a number of requirements. AMD is required to “not discriminate against Chinese clients and to continue supplying Xilinx’s products to the country,” Bloomberg reported. According to Reuters, AMD must also ensure that Xilinx FPGAs’ “development methods are compatible with Arm-based processors.” 

Another condition is that AMD maintain the “flexibility and programmability of Xilinx FPGAs.” Moreover, the company must not “force tie-in sales of products or discriminate against customers that buy one set of products but not another,” Reuters reported. 

Most processors, such as central processing units, are comprised of circuits designed for a specific set of tasks. A company that purchases a processor usually can’t modify what tasks the chip’s individual circuits are capable of performing, or only to a limited extent. FPGAs, in contrast, have customizable circuits called logic blocks that companies can customize for a variety of different tasks.

FPGAs’ customizability allows them to provide higher performance than a CPU in many cases. A company could, for example, purchase an FPGA chip and modify its logic blocks with optimizations that speed up machine learning calculations. The chip would then be capable of running machine learning applications faster than most CPUs, which usually feature only a limited number of circuits optimized for artificial intelligence use cases.

Similarly, companies can optimize their FGPAs for other tasks, such as processing network traffic or performing data analytics. Xilinx’s silicon is also popular among fellow semiconductor firms, which use its FGPAs to prototype the features of new processors before launching them.

Acquiring Xilinx will enable AMD to expand its presence in the lucrative data center processor market. Xilinx’s FGPA can be found in a wide variety of data enter systems, from servers to storage equipment and network devices. Moreover, the company’s chips are used by Amazon Web Services Inc. and Microsoft Corp. to power some of their cloud instances.

Xilinx reported Wednesday that revenue from its data center business jumped an impressive 81% last quarter on a year-over-year basis. The company attributed the sales increase to strong demand from companies using its chips to build compute and networking systems.

Demand from data center customers helped increase Xilinx’s revenue to a record $1.01 billion last quarter. The company’s revenue growth was also supported by the momentum of its adaptive system-on-chip business. The business provides processors that combine customizable FPGA components with other types of silicon in a single module. Adaptive SoC revenues increased 30% year-over-year last quarter, Xilinx said, and now account for 28% of its total revenue. 

AMD expects to close the long-awaited acquisition of Xilinx in the first quarter.

Photo: AMD