AMD has agreed to sell the server manufacturing segment of ZT Systems to Sanmina for around $3 billion, a step that aims to bolster the U.S. infrastructure for artificial intelligence and enhance cloud production capabilities. This transaction marks a significant strategic transition for AMD as it seeks to accelerate the production quality and speed of its growing AI systems portfolio, particularly focusing on cloud applications.

The deal consists of both cash and stock, with an additional contingent payment of up to $450 million, pending typical closing conditions and regulatory approvals. The acquisition is anticipated to wrap up by the end of 2025 and comes on the heels of ZT Systems announcing in August 2024 that it was looking for a buyer for its manufacturing operations, which have been vital in creating scalable solutions for data centers.

As part of this arrangement, AMD will keep ZT Systems’ design and customer support teams intact to ensure seamless continuity in both system development and client relations. By merging these teams with Sanmina’s manufacturing prowess, AMD aims to optimize production cycles and enhance its responsiveness to both hyperscale and cloud service providers.

Forrest Norrod, who serves as executive vice president and general manager of AMD’s Data Center Solutions group, emphasized that this partnership would harness AMD’s expertise in AI system design alongside Sanmina’s manufacturing capabilities. He noted that the collaboration is designed to increase domestic manufacturing, thus speeding up time-to-market for AMD’s clients in the AI and cloud sectors, which aligns with the company’s broader strategy for an open ecosystem.

Sanmina, recognized as a leading global provider of integrated manufacturing solutions, serves various sectors including communications and cloud infrastructure. The acquisition of ZT Systems further extends Sanmina’s influence in the high-demand areas of AI and cloud infrastructure.

Jure Sola, Sanmina’s chairman and CEO, remarked on the strategic compatibility of this acquisition, highlighting ZT Systems’ liquid cooling technologies, high-volume manufacturing expertise, and specialized knowledge in cloud and AI infrastructure. He affirmed that this move fortifies Sanmina’s ability to deliver vertically integrated solutions throughout the product lifecycle, enhancing its competitive edge in the fast-evolving AI market.

AMD was represented in this transaction by Morgan Stanley & Co. LLC for financial guidance and Latham & Watkins LLP for legal support. The acquisition illustrates a broader trend in the industry where chipmakers are increasingly teaming up with manufacturing partners to meet the surging demand for AI-enhanced data center infrastructure.

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