AI Money: Tech Giants Ramp Up AI Investments

AMD is set to acquire Finland’s Silo AI for $665 million, underscoring its commitment to artificial intelligence (AI) innovation. Simultaneously, CyrusOne has secured $9.7 billion in new financing to expand AI infrastructure, while semiconductor manufacturing firm TSMC surpasses revenue expectations fueled by strong AI chip demand, reflecting the broader industry trend of increased investment in AI technology.

AMD Bets Big on AI with $665 Million Silo AI Acquisition

Advanced Micro Devices announced Wednesday (July 10) its plan to acquire Finnish AI startup Silo AI for $665 million in cash. The deal marks AMD’s latest effort to challenge Nvidia’s dominance in the burgeoning AI chip market.

“Across every industry, enterprises are looking for fast and effective ways to develop and deploy AI solutions for their unique business needs,” Vamsi Boppana, senior vice president of the Artificial Intelligence Group at AMD, said in a news release. “Silo AI’s team of trusted AI experts and proven experience developing leadership AI models and solutions, including state-of-the-art LLMs built on AMD platforms, will further accelerate our AI strategy and advance the build-out and rapid implementation of AI solutions for our global customers.”

Silo AI, based in Helsinki, creates end-to-end AI solutions for blue-chip clients, including Philips, Rolls-Royce and Unilever. The acquisition is expected to enhance AMD’s ability to develop and deploy AI models using its chips, potentially opening doors for customers seeking to build complex AI systems.

The deal, slated to close in the second half of 2024, will see Silo AI’s CEO Peter Sarlin continue to lead the unit within AMD’s Artificial Intelligence Group. It follows AMD’s recent acquisitions of AI software firms Mipsology and Nod.ai, reflecting the company’s aggressive investment in AI technology over the past year.

CyrusOne Secures $9.7 Billion in New Financing

CyrusOne, a global data center developer and operator, has closed on $9.7 billion in new debt financing, bolstering its ability to expand and meet the surging demand for digital infrastructure, particularly in the AI sector.

The company announced Monday it had secured a $7.9 billion warehouse credit facility, following a $1.8 billion revolving credit facility completed in May. Both facilities are sustainability-linked, with interest rates tied to the company’s progress in reducing greenhouse gas emissions.

“The successful closing of this significant financing, combined with our strong business outlook for growth, expands our ability to deliver world-class digital infrastructure projects,” Eric Schwartz, CyrusOne’s chief executive officer, said in a news release. “We are extremely grateful to our financial partners for their continued support of CyrusOne.”

The new financing comes as CyrusOne positions itself to capitalize on the AI boom. Last year, the company launched Intelliscale, a data center solution designed explicitly for AI workloads.

Fran Federman, CyrusOne’s chief investment officer, highlighted the attractiveness of the new debt facilities. “Our ability to raise these debt facilities and the tremendous interest that we have received from the lender community is a testament to the strength of our business,” she said in the news release.

The warehouse facility will primarily fund U.S. development projects, while the revolving credit line will be used for working capital and general corporate purposes.

Morgan Stanley, TD Securities and KKR Capital Markets led the arrangement of the warehouse facility, with Wells Fargo spearheading the revolving credit facility. Global Infrastructure Partners, which acquired CyrusOne in a $15 billion deal in 2022, was also closely involved in the transactions.

The substantial financing package underscores the robust investor appetite for data center assets, which have become increasingly critical as businesses accelerate their digital transformation efforts and AI applications proliferate.

TSMC Surpasses Q2 Revenue Expectations on AI Chip Demand

Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, reported a strong 32% year-over-year increase in second-quarter revenue, beating market forecasts and highlighting the growing demand for artificial intelligence (AI) chips.

The company’s revenue for the April-June period reached 673.51 billion New Taiwan dollars ($20.67 billion), surpassing the LSEG SmartEstimate of NT$654.27 billion based on forecasts from 21 analysts. This performance is notable, given the broader semiconductor industry slowdown, underscoring TSMC’s strategic position in the AI market.

TSMC, which counts tech giants Apple and Nvidia among its clients, has seen its stock price climb to record highs as investors bet on its AI-driven growth strategy. However, U.S.-listed shares remained relatively flat in pre-market trading Wednesday, suggesting that some of this optimism may already be priced into the stock.

TSMC’s performance is particularly significant given the geopolitical tensions surrounding Taiwan and the global semiconductor supply chain. The company’s dominant position in advanced chip manufacturing has made it a focal point in the technology rivalry between the United States and China.

Investors and analysts will be watching TSMC’s earnings call on July 18, where the company is expected to provide more detailed insights into its performance and outlook. Key areas of interest include the company’s capacity expansion plans, particularly for its most advanced nodes, and updates on its overseas investments, including its Arizona fab project.

As AI continues to reshape the tech landscape, TSMC’s ability to meet the demanding requirements of AI chip design will be crucial. The coming quarters will be telling as the industry watches to see if TSMC can maintain this growth trajectory and how it balances the needs of its diverse customer base.