AMD Announces Agreement to Divest ZT Systems Data Center Infrastructure Manufacturing Business to Sanmina

Rhea-AI Summary

AMD (NASDAQ: AMD) has announced an agreement to sell ZT Systems' data center infrastructure manufacturing business to Sanmina (NASDAQ: SANM) for $3 billion in cash and stock, including a contingent payment of up to $450 million. The transaction is expected to close by the end of 2025.

As part of the deal, AMD will retain ZT Systems' design and customer enablement teams while Sanmina becomes a preferred new product introduction (NPI) manufacturing partner for AMD's cloud rack and cluster-scale AI solutions. This divestiture aligns with AMD's previously announced intentions during the ZT Systems acquisition in August 2024.

The strategic partnership aims to strengthen AMD's U.S-based manufacturing capabilities for AI systems and accelerate quality and time-to-market for cloud customers.

Positive

• Sale will generate $3 billion in cash and stock for AMD
• AMD retains valuable design and customer enablement teams from ZT Systems
• Partnership with Sanmina expected to accelerate quality and time-to-market for cloud customers
• Strengthens AMD's U.S-based manufacturing capabilities for AI systems

Negative

• Divestment of manufacturing capabilities could impact direct control over production
• Deal completion subject to regulatory approvals and closing conditions
• $450 million of the payment is contingent on certain conditions

Insights

Financial Analyst

AMD's $3B sale of ZT Systems' manufacturing to Sanmina strengthens its AI strategy while monetizing non-core assets.

AMD's strategic divestiture of ZT Systems' manufacturing business to Sanmina for $3 billion represents a significant financial and operational move. The transaction includes $2.55 billion in guaranteed consideration plus a contingent payment of up to $450 million, suggesting performance-based incentives tied to the business's future success.

What's particularly notable is that this divestiture was planned from the beginning when AMD acquired ZT Systems, indicating a well-executed strategic roadmap. AMD is wisely keeping the high-value design and customer enablement components while offloading the capital-intensive manufacturing operations, effectively transforming a manufacturing asset into cash and focusing on their core competencies.

The deal establishes Sanmina as a preferred manufacturing partner for AMD's cloud rack and AI solutions, creating a specialized supply chain relationship that should enhance AMD's production capabilities without carrying the operational burden. This arrangement allows AMD to maintain quality control while improving capital efficiency.

This transaction appears designed to accelerate AMD's ability to deploy AI systems for cloud customers—a critical growth sector—while strengthening its U.S.-based manufacturing capabilities through the partnership. For investors, this represents AMD's continued strategic pivot toward higher-margin AI solutions while maintaining supply chain flexibility through partnerships rather than vertical integration.

The expected closing timeline near the end of 2025 and contingent payment structure suggest a thoughtful approach to valuation that protects AMD's interests while providing incentives for business performance during the transition period.

• $3 billion in cash and stock, inclusive of a contingent payment of up to $450 million
• AMD retains ZT Systems’ rack-scale AI solutions design and customer enablement expertise to accelerate quality and time-to-deployment for cloud customers
• Divestiture and preferred NPI manufacturing partnership with Sanmina consistent with intentions announced at the time of ZT Systems acquisition
  

SANTA CLARA, Calif., May 19, 2025 (GLOBE NEWSWIRE) -- AMD (NASDAQ: AMD) today announced it has entered into a definitive agreement to sell ZT Systems’ U.S.-headquartered data center infrastructure manufacturing business to Sanmina (NASDAQ: SANM), a leading integrated manufacturing solutions company. As part of the transaction, Sanmina becomes a preferred new product introduction (NPI) manufacturing partner for AMD cloud rack and cluster-scale AI solutions. AMD will retain ZT Systems’ world-class design and customer enablement teams to accelerate the quality and time-to-deployment of AMD AI systems for cloud customers.

Sanmina will purchase the manufacturing business from AMD for $3 billion in cash and stock, inclusive of a contingent payment of up to $450 million and subject to customary adjustments for working capital and other items. The transaction is expected to close near the end of 2025, subject to regulatory approvals and customary closing conditions. The intent to seek a strategic partner to acquire ZT Systems’ world-class data center infrastructure manufacturing business was announced in August 2024 at the time of the original acquisition announcement.

“By combining the deep experience of our AI systems design team with our new preferred NPI partnership with Sanmina, we expect to strengthen our U.S-based manufacturing capabilities for rack and cluster-scale AI systems and accelerate quality and time-to-market for our cloud customers,” said Forrest Norrod, executive vice president and general manager, Data Center Solutions business unit at AMD. “The ZT Systems manufacturing business and its expert team remain a very important and strategic partner to AMD. We look forward to working with Sanmina to deliver world-class design, quality and manufacturing of AMD AI solutions supported by our open ecosystem approach.”

Sanmina is a U.S.-headquartered leading integrated manufacturing solutions provider serving the fastest growing segments of global Electronic Manufacturing Services (EMS), offering end-to-end design, manufacturing, logistics and repair solutions for OEMs across a variety of industries.

“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, mission-critical technologies and vertical integration capabilities,” said Jure Sola, Chairman and CEO of Sanmina Corporation. “Together, we will be better able to deliver a competitive advantage to our customers with solutions for the entire product lifecycle. We look forward to our ongoing partnership with AMD as we work together to set the standard for quality and flexibility to benefit the entire AI ecosystem.”

Advisors
Morgan Stanley & Co. LLC is acting as exclusive financial advisor to AMD and Latham & Watkins LLP is serving as the company’s legal advisor.

About AMD
For more than 55 years AMD has driven innovation in high-performance computing, graphics and visualization technologies. Billions of people, leading Fortune 500 businesses and cutting-edge scientific research institutions around the world rely on AMD technology daily to improve how they live, work and play. AMD employees are focused on building leadership high-performance and adaptive products that push the boundaries of what is possible. For more information about how AMD is enabling today and inspiring tomorrow, visit the AMD (NASDAQ: AMD) website, blog, LinkedIn and X pages. 

Cautionary Statement

The statements in this press release includes forward-looking statements concerning Advanced Micro Devices, Inc. (“AMD”), ZT Group Int’l, Inc (“ZT Systems”) and Sanmina Corporation (“Sanmina”), the proposed transaction described herein and other matters. Forward-looking statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. Forward-looking statements speak only as of the date they are made or as of the dates indicated in the statements and should not be relied upon as predictions of future events, as there can be no assurance that the events or circumstances reflected in these statements will be achieved or will occur. Forward-looking statements can often, but not always, be identified by the use of forward-looking terminology including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma,” “estimates,” “anticipates,” “designed,” or the negative of these words and phrases, other variations of these words and phrases or comparable terminology. The forward-looking statements relate to, among other things, Sanmina as a preferred NPI strategic partner and expected benefits and results from such preferred strategic partnership; AMD’s ability to accelerate the quality and time-to-deployment of AMD AI systems with ZT Systems design and customer enablement teams, obtaining applicable regulatory approvals, satisfying other closing conditions to the transaction, the expected timing of the transaction, the expected benefits to result from the transaction, AMD’s ability to accelerate AI innovation while providing the choice and open ecosystem options that customers want, the ability of AMD to leverage the systems expertise of the ZT Systems design team while optimizing AMD’s operational structure, and AMD’s ability to drive growth across its data center and AI businesses. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the statements. These risks include, among other things: failure to formalize the contemplated preferred NPI manufacturing partnership between AMD and Sanmina or the failure for such preferred strategic partnership to achieve its anticipated results; failure to accelerate the quality and time-to-deployment of AMD AI systems with ZT Systems design and customer enablement teams; failure to obtain applicable regulatory approvals in a timely manner or otherwise; failure to satisfy other closing conditions to the transaction or to complete the transaction on anticipated terms and timing; negative effects of the announcement of the transaction; risks that AMD will not realize expected benefits from the transaction or may take longer to realize than expected; the risk that disruptions from the transaction will harm business plans and operations; significant transaction costs, or difficulties and/or unknown or inestimable liabilities in connection with the transaction; restrictions during the pendency of the transaction that may impact the ability to pursue certain business opportunities or strategic transactions; the potential impact of the announcement or consummation of the transaction on AMD’s, Sanmina’s or either of their relationships with suppliers, customers, employees and regulators; and demand for AMD’s or Sanmina’s products. For a discussion of factors that could cause actual results to differ materially from those contemplated by forward-looking statements, see the section captioned “Risk Factors” in AMD’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024, subsequent Quarterly Reports on Form 10-Q and other filings with the SEC. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. AMD does not assume, and hereby disclaims, any obligation to update forward-looking statements, except as may be required by law.

Contact:
Brandi Martina
AMD Communications
(512) 705-1720
Brandi.Martina@amd.com

Liz Stine
AMD Investor Relations
(720) 652-3965
Liz.Stine@amd.com

FAQ

What is the value of AMD's deal to sell ZT Systems to Sanmina?

AMD is selling ZT Systems' manufacturing business to Sanmina for $3 billion in cash and stock, which includes a contingent payment of up to $450 million.

What will AMD retain after selling ZT Systems to Sanmina?

AMD will retain ZT Systems' design and customer enablement teams to accelerate the quality and time-to-deployment of AMD AI systems for cloud customers.

When is AMD's ZT Systems sale to Sanmina expected to close?

The transaction is expected to close near the end of 2025, subject to regulatory approvals and customary closing conditions.

What is Sanmina's role in the AMD partnership after the acquisition?

Sanmina will become a preferred new product introduction (NPI) manufacturing partner for AMD's cloud rack and cluster-scale AI solutions.

Was this sale of ZT Systems planned by AMD?

Yes, AMD had announced its intent to seek a strategic partner to acquire ZT Systems' manufacturing business in August 2024 when they initially acquired ZT Systems.