AMD to offload ZT Systems server-manufacturing for $3bn

AMD to offload ZT Systems server-manufacturing for $3bn

Advanced Micro Devices (AMD) has announced a definitive agreement to sell its ZT Systems' data center infrastructure manufacturing business to Sanmina. The transaction, valued at $3bn in cash and stock, is expected to close in late 2025, subject to customary approvals and conditions [1].

Under the deal, Sanmina will take over ZT Systems' operations for $2.25bn in cash and a $300m premium split between cash and equity. Additionally, the deal includes a contingent consideration of $450m based on the financial performance of the business over the next three years [2]. This acquisition positions Sanmina as a preferred partner for the manufacturing of AMD's cloud rack and cluster-scale AI solutions.

Sanmina expects the acquisition to increase its scale and end-market exposure to cloud and AI infrastructure. The company anticipates bolstering its offering of end-to-end component technology, systems integration, and supply chain solutions [3]. Jure Sola, chairman and CEO of Sanmina, stated that ZT Systems' liquid cooling capabilities, high-quality manufacturing capacity, and significant cloud and AI infrastructure experience are the perfect complement to Sanmina’s global portfolio.

AMD will retain ZT Systems' expertise in rack-scale AI solution design and customer enablement to accelerate quality and time to market for cloud customers [1]. The sale follows AMD's deal to acquire ZT Systems for $4.9bn in 2024, with the intention to sell the server manufacturing business upon completion of the deal [2].

Forrest Norrod, executive vice-president and general manager of AMD’s data center solutions business, said, "We look forward to working with Sanmina as our preferred NPI manufacturing partner. This agreement will help accelerate the US-based manufacturing of AMD AI end-to-end training and inference solutions – which are optimized for our customers' unique environments, ready-to-deploy at scale, and based on our open approach" [4].

Morgan Stanley is advising AMD financially, while Latham & Watkins is providing legal counsel [2]. The transaction is scheduled for completion by late 2025, subject to regulatory approval and standard closing conditions [3].

References:
[1] https://www.marketscreener.com/quote/stock/AMD-ADVANCED-MICRO-DEVICE-19475876/news/AMD-agrees-to-sell-business-to-Sanmina-49997862/
[2] https://finance.yahoo.com/news/amd-offload-zt-systems-server-101732922.html
[3] https://www.verdict.co.uk/amd-zt-server-3bn/
[4] https://www.datacenterdynamics.com/en/news/sanmina-acquires-us-data-center-manufacturing-arm-of-zt-systems-from-amd-for-3bn/