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Internal document: AWS has planned lower spending on ZT Systems, a data center gear maker being acquired by AMD

Dec 26, 2024 - businessinsider.com
Amazon Web Services (AWS) is planning to reduce its spending on ZT Systems as it increasingly designs its own data center components to improve efficiency and lower costs. AWS spent nearly $2 billion on ZT Systems last year, but internal documents and employee insights suggest a shift towards custom hardware, potentially impacting future expenditures with ZT Systems. Despite this, AWS maintains a business relationship with ZT Systems, and the transition may occur gradually due to ZT Systems' integration with AWS servers. AWS's move to design more components in-house aligns with its strategy to reduce reliance on external suppliers and pass cost savings onto cloud customers.

AWS remains the largest cloud provider, with significant capital expenditures planned, including $75 billion this year and more in 2025, primarily for data centers. The company continues to collaborate with AMD, which recently agreed to acquire ZT Systems for $4.9 billion. While AWS offers cloud access to AMD CPUs, it has not yet integrated AMD's new AI chips due to low demand. The trend of designing custom hardware is common among tech giants, with companies like Nvidia and Google also developing their own data center components.

Key takeaways:

  • AWS is reducing its spending on ZT Systems as it designs more data center components in-house to improve efficiency and reduce costs.
  • Despite the reduction in spending on ZT Systems, AWS continues to have a business relationship with the company and may still use ZT for manufacturing in-house designs.
  • AWS's shift to custom hardware is part of a broader trend among tech giants to design their own data center components, similar to companies like Nvidia and Google.
  • Amazon is expected to increase its capital expenditures, with significant investments planned for AWS data centers in 2025.
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