Shares of Xilinx (NASDAQ:XLNX) jumped 14% on Friday, following reports that the semiconductor company was in takeover talks.
Advanced Micro Devices (NASDAQ:AMD) is in advanced negotiations to acquire Xilinx for as much as $30 billion, according to The Wall Street Journal. The companies could reach an agreement as early as next week, though the Journal cautions that talks could fall through.
AMD's interest in Xilinx could have been heightened by NVIDIA's (NASDAQ:NVDA) move to acquire UK-based chip designer Arm Limited for $40 billion. The semiconductor industry is rapidly consolidating, and AMD wants to keep pace with NVIDIA and its other competitors.
Xilinx produces adaptive processing chips that can be programmed in the field. They can be used in a wide array of growth markets, including 5G network infrastructure, cloud computing, and artificial intelligence. Should a deal be reached, adding Xilinx under its umbrella would give AMD a stronger presence in these areas and broaden its total addressable market.
Investors, though, appear to be concerned with the price AMD is paying or the risks integrating a business the size of Xilinx would entail, or perhaps both. AMD's shares fell 4% on Friday.