US chipmaker and semiconductor designer Advanced Micro Devices, Inc. (AMD) announced Tuesday that it agreed to buy chip programmer Xilinx for $35 billion in an all-stock deal. 

The transaction between the two Silicon Valley companies, which is expected to close by the end of 2021, will create a combined company of 13,000 engineers and over $2.7 billion of annual investment in research and development, according to an AMD statement.

With the deal, the AMD aims to gain market share from its main competitor Intel in processor industry. Intel in 2015 bought Xilinx’s main rival Altera Corporation for $16.7 billion.

The acquisition is also expected to strengthen the AMD’s grasp in data centers and processor technologies, the statement said.

“Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world,” AMD President and CEO Lisa Su said in the statement.

Xilinx President and CEO Victor Peng said joining the AMD will accelerate the combined firm’s growth in data center business and enable it to pursue a broader customer base across more markets.

The AMD shares were down around 4% on the Nasdaq before market opening on Tuesday, while Xilinx shares were up around 10%.

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