A Major Move in the Tech Industry

In a groundbreaking deal, AMD announced that it has agreed to sell its data center infrastructure manufacturing division, ZT Systems, to Sanmina for a staggering $3 billion in cash and stock. This transaction also includes a potential contingent payment of up to $450 million.

Retaining Key Expertise

Despite the substantial divestiture, AMD will retain ZT Systems' top-notch design and customer enablement teams. This strategic move is set to enhance the quality and speed of deployment for AMD's AI solutions in the cloud sector.

Strategic Partnership with Sanmina

Sanmina, a leader in integrated manufacturing solutions, will now be a preferred partner for new product introductions (NPIs) related to AMD’s innovative cloud rack and cluster-scale AI solutions. The partnership aims to bolster U.S.-based manufacturing capabilities and position both companies for immense growth.

Timelines and Expectations

Set to close by the end of 2025, this transaction is still subject to regulatory approvals and customary closing conditions. AMD initially hinted at finding a strategic partner for ZT Systems back in August 2024 during the original acquisition announcement.

Comments from Top Executives

Forrest Norrod, AMD's EVP and general manager of Data Center Solutions, expressed optimism: "By integrating our AI systems design team with Sanmina's expertise, we anticipate enhanced manufacturing capabilities and quicker market delivery for our cloud customers." Similarly, Jure Sola, CEO of Sanmina, highlighted the synergy between ZT Systems' advanced cooling technology and manufacturing prowess with Sanmina's extensive portfolio. He stated, "Together, we will offer customers a competitive edge across the entire product lifecycle."

Looking Ahead

As AMD continues to reshape its business landscape, the implications of this transaction could significantly alter the competitive dynamics in the AI and cloud infrastructure markets. With Sanmina’s capabilities and AMD’s innovative edge, the tech industry will be watching closely to see how this partnership evolves.