AMD is Buying Startup Led by Cisco Vets for $1.9 Billion

Wall Street learned this week that Advanced Micro Devices Inc. (AMD) is buying Pensando Systems Inc. for about $1.9 billion.

The startup based in Milpitas, California is led by a team of engineers and executives who sold several of their previous ventures to Cisco Systems Inc.

The latest company from Pensando CEO Prem Jain and his colleagues makes fully programmable chips and software. Their products are designed to transform the data centers and networks of big legacy companies into next-generation clouds without costly added investment or disruption.

Customers include include Goldman Sachs Group Inc., Microsoft Corp.’s Azure, Hewlett Packard Enterprise Development LP and Oracle Corp.’s cloud unit.

Founded in 2017, the company has raised a total of about $313 million in funding from investors who include former Cisco CEO John Chambers and Lightspeed Venture Partners. It was valued at slightly more than $2 billion after its mist recent funding last August, according to PitchBook Data.

Pensando is expected to help AMD CEO Lisa Su’s efforts to rebuild AMD’s data center chip business.

“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,” Su said in Monday’s announcement.

“The Pensando team brings world-class expertise and a proven track record of innovation at the chip, software and platform level which expands our ability to offer leadership solutions for our cloud, enterprise and edge customers.”

The deal is expected to close in the second quarter of this year. AMD said that Pensando CEO Jain and his entire team will join its Data Center Solutions Group.

AMD also completed its $49 billion acquisition of San Jose-based Xilinx Inc. in February.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.