Advanced Micro Devices Inc. today announced plans to acquire data center chip startup Pensando Systems Inc. for about $1.9 billion.

AMD expects to complete the acquisition by the end of the quarter. After the deal closes, Pensando will become part of AMD’s Data Center Solutions Group.

In a data center, only a portion of the available processing capacity is used to run applications. The rest is used to carry out supporting tasks such as managing the storage infrastructure in which applications keep their data and coordinating network traffic. Milpitas, California-based Pensando has developed a chip that can carry out such supporting tasks with a high degree of efficiency.

Pensando provides its chip as part of an accelerator card that can be attached to the servers in a data center. The card is capable of performing networking tasks, such as routing information from one server to another. It also helps with cybersecurity: The chip can encrypt data and implement firewall rules to block malicious network traffic.

Storage infrastructure management is another use case that Pensando targets. The company’s accelerator cards can compress datasets to reduce the amount of storage capacity that they require, apply encryption and speed up the computations involved in detecting data errors.

Many of the computing tasks that Pensando’s hardware can perform were historically relegated to specialized appliances. The startup says that its technology reduces the need for appliances, thereby decreasing the total number of systems running in a data center. That simplifies day-to-day maintenance tasks for information technology teams.

According to Pensando, increased network efficiency is another benefit of its technology. A server that relies on an appliance to carry out computing tasks has to send data to the appliance for processing and then wait until the results return. Pensando’s accelerator cards, in contrast, are attached directly to servers, which allows them to perform processing locally without the delay of sending data across the network to a separate appliance.

Pensando last year partnered with Hewlett Packard Enterprise Co. to launch a data center switch that uses its chip technology. Discussing the switch in a 2021 interview on SiliconANGLE Media’s theCUBE (below), John Chambers, the chair of Pensando’s board, stated that “the results even surprised our engineers.” Chambers added that “they were 100 times the scale of the nearest competitor in the market today at 10 times the performance and one-third the total cost of ownership. Antonio and I can even sell that.”

AMD disclosed today on occasion of the acquisition that Pensando has shipped more than 100,000 “Pensando platforms” to date. Microsoft Corp., Oracle Corp. and IBM Corp. are among the organizations using the startup’s technology.

The acquisition of Pensando will help AMD expand its already fast-growing data center business. Last quarter, the business doubled its revenues on a year-over-year basis thanks partly to strong demand for AMD’s Epyc line of server processors.

“To build a leading-edge data center with the best performance, security, flexibility and lowest total cost of ownership requires a wide range of compute engines,” said AMD Chief Executive Officer Lisa Su (pictured). “All major cloud and OEM customers have adopted EPYC processors to power their data center offerings. Today, with our acquisition of Pensando, we add a leading distributed services platform to our high-performance CPU, GPU, FPGA and adaptive SoC portfolio.”

Besides creating a new source of revenue growth for AMD, Pensando’s technology could also help it more directly compete with Nvidia Corp. in an increasingly important part of the data center chip market. Nvidia offers competing chips that can speed up tasks as encrypting data and managing storage infrastructure. Moreover, Intel Corp. joined the fray as well last year with its IPU chip series.

AMD’s purchase of Pensando comes weeks after the chipmaker completed its landmark acquisition of Xilinx for $50 billion. Xilinx makes field-programmable gate array, or FPGA, chips that can be customized to carry out a variety of processing tasks. The chips are widely used in data centers.

Photo: AMD