AMD Sells ZT Systems' Data Center Division to Sanmina for $3 Billion

Advanced Micro Devices (AMD), the California-based semiconductor company, has announced a significant transaction involving the sale of the data center infrastructure division of ZT Systems, a recently acquired US server manufacturer, to Sanmina, a US-based contract manufacturer. This deal, valued at approximately $3 billion, includes cash and stock, with a contingent payment of up to $450 million tied to the performance of the acquired business over the next three years.

The completion of this transaction is expected by the end of the year, pending regulatory approval. As part of the agreement, Sanmina will become a preferred manufacturing partner for the introduction of new products (NPI) related to AMD's cloud rack and cluster-scale AI solutions.

Forrest Norrod, AMD's Executive Vice President and General Manager of Data Center Solutions, emphasized that this partnership is expected to enhance AMD's manufacturing capabilities in the US, particularly for rack and cluster-scale AI systems. The collaboration aims to improve quality and accelerate time-to-market for AMD's cloud customers. The manufacturing segment of ZT Systems, along with its expert team, will remain a critical strategic partner for AMD.

This deal underscores AMD's commitment to increasing its chip production within the United States, a move that aligns with broader efforts to bolster domestic semiconductor manufacturing amid rising global trade tensions. This has become particularly relevant in light of initiatives by the US government to expand domestic semiconductor production. Recently, AMD also announced plans to produce its key central processing units at TSMC's new semiconductor facility in Arizona.

The acquisition of ZT Systems for $4.9 billion was finalized only a few months ago, and at that time, AMD indicated its intention to find a third-party buyer for the data center infrastructure segment. The acquisition was completed at the end of March, and it followed AMD's earlier acquisition of Finnish company Silo AI for $665 million, which aimed to enhance AMD's capabilities in artificial intelligence by developing proprietary large language models.

In the current agreement, AMD will retain control over the design division for AI solutions within ZT Systems, which is anticipated to play a crucial role in AMD's portfolio as it competes in the growing AI processor market against leading competitor Nvidia.