US-headquartered chipmaker AMD agreed to buy cloud start-up Pensando for $1.9 billion, in a move which will strengthen its data centre products and other services for cloud, enterprise and edge applications.

AMD chair and CEO Lisa Su stated it plans to add Pensando’s distributed services platform to its CPU, GPU, FPGA and adaptive SoC portfolio. The deal value does not include working capital and other adjustments.

The acquisition is expected to close in the current quarter, subject to customary closing conditions.

AMD stated Pensando’s programmable packet processor and software stack are deployed by cloud and enterprise customers including Goldman Sachs, IBM Cloud, Microsoft Azure and Oracle Cloud.

It explained the Pensando packet processor can be distributed throughout a network to boost overall performance by easing the strain on the CPU, which could reduce the need for new servers.

Pensando’s competitors in the data centre chip sector include Intel and NVidia, with the company’s silicon focused on computing tasks related to network management, security and data storage.

“The data processing unit market is heating up and Nvidia is ramping up its DPU capabilities, so it makes sense that AMD is playing catch-up by acquiring this well-known DPU player,” Scott Raynovich, founder and chief analyst of cloud research company Futuriom, told Mobile World Live.

Pensando CEO Prem Jain and the rest of his team will join AMD’s data centre solutions group.

The company was founded in 2017, with former Cisco CEO and chair John Chambers an early investor and the company’s current chair.