The rumors were true, only the price was off. AMD formally announced this week it intends to acquire FPGA maker Xilinx for $35 billion, not $30 billion as originally rumored.\nXilinx is the biggest maker of field-programmable gate array (FPGA) chips, a class of chips that can be reconfigured for a variety of specialized tasks by the end user. They are especially popular in vertical markets like automotive and cellular base stations, where a chip can be reprogrammed for a new or special task.\nAnalysts see Xilinx as an AI play for AMD, which has lagged behind Nvidia in the race for machine learning (ML) and inference.\n\n\u201c[Xilinx] are moving into AI and ML and it gives [AMD] a whole other range of capabilities. They could in theory combine Xilinx with an AMD processor. I thought Intel would do it but they didn\u2019t. I would hope they would incorporate Xilinx into their product line and make a system solution,\u201d said Jim Feldhan, CEO of Semico Research.\n\u201cIt helps diversify AMD and gets them into new markets they are not in today that would take a heavy investment to get into, like automotive and telcom and industrial. Both Xilinx and AMD were focused on growing their data center businesses. Xilinx has been making good progress on the data center. It gives AMD another tool to compete with Nvidia,\u201d said Kevin Krewell, principal analyst with Tirias Research.\nBetter Leadership than Intel\nThe deal is an all-stock trade, a reflection of how AMD\u2019s stock has soared as its fortunes have turned around. Five years ago AMD shares traded at about $2 a share. On Tuesday when the deal was announced, it was at $78.88. AMD\u2019s market value is now nearly $100 billion.\n\u201cIt\u2019s a smart move doing an all stock deal and not taking on any debt. The last time they did that was when they acquired ATI in 2006 and it almost destroyed them,\u201d said Krewell.\nThis is the second major acquisition of a FPGA maker. In 2015, Intel dropped $16.7 billion for Altera, Xilinx\u2019s main competitor. That deal was inspired partly by the prospect of producing Altera chips in Intel factories, but that has not panned out and Altera has been something of a dud for Intel.\nAt least part of the blame lies with management. Intel at the time was under the leadership of Brian Krzanich, who ran things poorly and drove out a lot of talent. Feldhan gives much higher marks to AMD CEO Lisa Su.\n\u201cLisa Su really turned that company around. She has IBM experience on HPC. She is a good manager and tactician and I would say she knows what she is doing and not doing [the acquisition] on a whim,\u201d he said.\n\u201cIt\u2019s the blending of two companies that complement each other very well. Apparently Victor [Peng, Xilinx CEO] and Lisa have been talking for a while about combining their companies so it was not something out of the blue,\u201d said Krewell.\nThe deal is expected to close next year, with Peng, an AMD veteran himself, staying on to run the Xilinx business.