SANMINA ANNOUNCES ACQUISITION OF DATA CENTER INFRASTRUCTURE MANUFACTURING BUSINESS OF ZT SYSTEMS FROM AMD

Rhea-AI Summary

Sanmina (NASDAQ: SANM) has announced a transformative acquisition of ZT Systems' data center infrastructure manufacturing business from AMD for up to $3 billion. The deal includes $2.55 billion in cash and equity, plus $450 million in contingent consideration. ZT Systems generates approximately $5-6 billion in annual revenue and specializes in Cloud and AI infrastructure for hyperscalers. The acquisition brings advanced liquid cooling capabilities and manufacturing facilities in New Jersey, Texas, and the Netherlands. As part of the deal, AMD will retain ZT Systems' AI systems design business and establish a strategic partnership with Sanmina as their preferred NPI manufacturing partner. The transaction is expected to close by the end of 2025 and be accretive to Sanmina's non-GAAP EPS in the first year post-close. The deal significantly enhances Sanmina's position in the Cloud and AI ecosystem and is projected to double the company's revenue scale within three years.

Positive

• Expected to double Sanmina's revenue scale in three years
• Adds $5-6 billion in annual revenue run-rate from ZT Systems
• Transaction expected to be accretive to non-GAAP EPS in first year
• Strategic partnership with AMD as preferred NPI manufacturing partner
• Expands manufacturing presence with facilities in New Jersey, Texas, and Netherlands
• Brings advanced liquid cooling capabilities and 30 years of systems integration experience
• Operational synergies expected through scale and vertical integration

Negative

• Significant acquisition cost of up to $3 billion
• Substantial debt financing required ($2.5 billion from Bank of America)
• Integration risks with large-scale acquisition
• Potential dilution from equity component of deal

Insights

M&A Financial Analyst

Sanmina's strategic $3B acquisition of ZT Systems doubles revenue potential while establishing leadership in high-growth AI/cloud infrastructure manufacturing.

Sanmina's $2.55 billion acquisition of ZT Systems' manufacturing business from AMD represents a transformational move that dramatically expands the company's footprint in the booming cloud and AI infrastructure market. The deal structure includes $2.25 billion cash for assets, a $300 million premium (half cash, half equity), and up to $450 million in performance-based contingent payments.

The strategic rationale here is compelling. ZT Systems brings approximately $5-6 billion in annual revenue run-rate to Sanmina, essentially doubling the company's revenue scale within three years post-integration. This instantly propels Sanmina to leadership status in manufacturing advanced cloud and AI infrastructure for hyperscalers – the fastest-growing segment of the data center market.

This transaction delivers four critical strategic advantages: geographic expansion through facilities in New Jersey, Texas, and the Netherlands; vertical integration of mission-critical manufacturing capabilities; enhanced relationships with hyperscaler clients; and advanced liquid cooling technology expertise essential for next-generation AI computing systems.

The deal structure intelligently aligns interests between Sanmina and AMD, with the equity component subject to a three-year lockup period and the substantial performance-based contingent consideration. This suggests both companies have confidence in the continued growth trajectory of the acquired business.

Management expects the acquisition to be accretive to non-GAAP EPS in the first year after closing, with further benefits expected as operational synergies materialize. With secured financing from Bank of America for $2.5 billion, Sanmina has created a clear path to closing near the end of 2025, pending regulatory approvals.

The most significant value creation driver here is the strategic partnership with AMD. By becoming AMD's preferred NPI manufacturing partner for AI rack and cluster-scale systems, Sanmina positions itself to capture substantial growth as AMD expands its AI solutions portfolio. This relationship creates a powerful competitive moat in the U.S.-based AI infrastructure manufacturing space.

Technology Industry Strategist

The acquisition positions Sanmina as a critical manufacturing partner in AI infrastructure, capturing exponential growth in compute-intensive data centers.

This acquisition represents a strategic pivot for Sanmina into the epicenter of the AI infrastructure boom. By acquiring ZT Systems' manufacturing operations, Sanmina secures specialized capabilities in advanced liquid cooling – a mission-critical technology for managing thermal challenges in dense AI compute environments where traditional air cooling is insufficient.

The timing is particularly strategic as the AI infrastructure market undergoes a fundamental shift. Traditional server manufacturing is giving way to specialized AI systems integration requiring complex liquid cooling, accelerator management, and rack-scale designs. ZT Systems brings over 30 years of systems integration experience specifically tailored to hyperscaler requirements – knowledge that can't be easily replicated.

The competitive landscape analysis reveals this positions Sanmina ahead of traditional contract manufacturers in the high-margin, high-complexity AI infrastructure segment. While most EMS providers can assemble standard servers, few possess the specialized capabilities for next-generation AI infrastructure at scale.

From a technical perspective, the acquisition provides Sanmina immediate access to manufacturing processes optimized for AI systems that utilize high-power components like GPUs, specialized memory configurations, and alternative cooling methods. These capabilities typically require years of development and close collaboration with hyperscalers to perfect.

The AMD partnership is particularly valuable as it creates a preferred channel for new product introductions. As AMD accelerates its AI chip portfolio development to compete with Nvidia, Sanmina becomes the manufacturing gateway for these solutions to reach hyperscale deployment. This creates a continuous pipeline of high-value manufacturing opportunities as each new AMD AI chip generation requires corresponding infrastructure redesigns.

The geographic footprint expansion also addresses the growing trend toward localized manufacturing of critical infrastructure. With facilities in New Jersey, Texas, and the Netherlands, Sanmina can now support the increasing demand for regionally diversified manufacturing of AI infrastructure driven by supply chain security concerns and data sovereignty requirements.

Transformational Acquisition Increases Sanmina's Scale and End-Market Exposure to Cloud and AI Infrastructure

Planned Divestiture by AMD Creates Preferred NPI Manufacturing Partnership with Sanmina, a Leading IMS Company

Purchase Price of $2.55 Billion Cash and Equity, Plus $450 Million in Contingent Consideration, Totaling Up to $3 Billion

Transaction Expected to be Accretive to Non-GAAP EPS in First Year Post-Close

Sanmina to Host Conference Call Today at 8:30 a.m. ET (5:30 a.m. PT)

SAN JOSE, Calif., May 19, 2025 /PRNewswire/ -- Sanmina Corporation ("Sanmina") (NASDAQ: SANM), a leading integrated manufacturing solutions company, today announced that it has entered into a definitive agreement to acquire the data center infrastructure manufacturing business of ZT Systems, a leading provider of Cloud and AI infrastructure to the world's largest hyperscalers, from AMD (NASDAQ: AMD). The strategic acquisition further establishes Sanmina's position as an industry-leading, vertically integrated global manufacturing solutions provider that can now also accelerate its customers' at scale deployments of cutting-edge AI systems for the data center. 

As a combined company, Sanmina expects to strengthen its leading end-to-end component technology, systems integration and supply chain solutions to deliver even greater value for its customers. ZT Systems' current annual net revenue run-rate is approximately $5 - $6 billion and the outlook ahead is promising as new accelerated compute platforms are launched. In addition, ZT Systems' manufacturing team brings over 30 years of systems integration experience and has evolved into a leading provider of high-performance Cloud and AI infrastructure for hyperscalers. The company's advanced liquid cooling capabilities and manufacturing facilities in New Jersey, Texas and the Netherlands, together with its global supply chain, position it to offer end-to-end systems integration, from components to complete racks, for the Cloud and AI infrastructure ecosystem.

"The acquisition of ZT Systems' manufacturing operations positions Sanmina as an industry leader in the Cloud and AI ecosystem and enables us to further capitalize on the significant growth opportunity of this market," stated Jure Sola, Chairman and CEO of Sanmina Corporation. "Combining Sanmina's global expertise and vertical integration capabilities with ZT Systems' high-quality manufacturing capacity in the U.S. and Europe and extensive experience with critical Cloud and AI infrastructure for hyperscalers will give us enhanced scale and deepen our customer relationships. Sanmina will be better able to deliver a competitive advantage to its customers, accelerating our growth initiatives and enabling us to deliver long-term sustainable value for shareholders."

Mr. Sola continued, "We look forward to welcoming the ZT Systems team to Sanmina and realizing the benefits of this highly strategic and accretive transaction."

Strategic Partnership with AMD

AMD will retain ZT Systems' AI systems design businesses and will work with Sanmina as a U.S.-based new product introduction (NPI) manufacturing partner of choice to accelerate quality and time-to-deployment of AMD AI rack and cluster-scale systems for cloud customers. As ZT Systems' manufacturing business continues its platform transition in 2025, Sanmina and AMD remain committed to ensuring the future success of the business' strong revenue.  

Forrest Norrod, Executive Vice President and General Manager, Data Center Solutions business unit at AMD said, "We look forward to working with Sanmina as our preferred NPI manufacturing partner. This agreement will help accelerate the U.S.-based manufacturing of AMD AI end-to-end training and inference solutions – which are optimized for our customer's unique environments, ready-to-deploy at scale and based on our open approach. Together, we will accelerate time-to-market and set the standard for quality and flexibility to benefit the entire AI ecosystem."

Compelling Strategic and Financial Rationale

• Increased Scale and High-Value End-Market Exposure: The addition of ZT Systems' manufacturing business significantly enhances Sanmina's position in the fast-growing Cloud and AI end-market. It is expected to double Sanmina's revenue scale in three years.
  
  
• Broadens and Deepens Cloud and AI Hyperscaler Customer Relationships: Through this transaction, Sanmina is well-positioned to both expand and deepen relationships with existing customers by offering a more comprehensive, integrated solution from a trusted partner, while also adding new customers through ZT Systems' relationships with hyperscalers.
  
  
• Brings Industry-Leading Manufacturing Capacity and Know-How to Sanmina's Existing Footprint: ZT Systems brings large state-of-the-art manufacturing facilities located in New Jersey and Texas, with advanced liquid cooling capabilities, that are complementary to Sanmina's existing domestic manufacturing footprint. ZT Systems also operates a facility in the Netherlands, offering the opportunity to expand Sanmina's presence in Europe.
  
  
• Reinforces Sanmina's Capabilities as a Leading End-To-End Manufacturing Partner for Mission-Critical Technologies: The combination enhances Sanmina's position as an industry leader and bolsters the Company's opportunities to capitalize on the increased demand for digital infrastructure. The addition of ZT Systems' manufacturing capabilities to Sanmina's global portfolio, mission-critical technologies and vertical integration enables solutions for the entire product lifecycle: design, engineering, manufacturing and fulfillment.
  
  
• Enhances Sanmina's Ability to Support a Broad Customer Base in the Cloud and AI End-Market: The addition of ZT Systems' manufacturing business establishes Sanmina's position in the industry, creating an all-encompassing offering with the addition of full systems integration at scale. Sanmina will now have the capabilities needed to partner closely with both hyperscaler and OEM customers across all platforms and technologies in the industry.
  
  
• Expected to Be Accretive to Earnings: The acquisition of ZT Systems' manufacturing business is expected to be accretive to Sanmina's non-GAAP EPS in the first year after closing, with further EPS accretion expected as synergies are fully realized over time.
  
  
• Compelling Synergy Opportunities: The combination is expected to generate synergies, driven primarily by operational efficiencies due to scale and vertical integration.

Transaction Details

Under the terms of the agreement, Sanmina has agreed to acquire ZT Systems' manufacturing operations for $2.25 billion of cash to pay for assets at target net asset value (with adjustment mechanism), $300 million premium consisting of 50% cash / 50% equity and a $450 million contingent consideration based on financial performance of the business over the next three years, for up to $3 billion total. 

The inclusion of equity and a long-term contingency in the consideration further align Sanmina and AMD's interests in connection with the entry into the new strategic partnership. 

The Sanmina equity issued to AMD will be subject to a lock-up period of 3 years, which begins at the time of closing, during which equity sales are limited to 33% in the first year, 33% in the second year, and the remaining equity in the third year.

In connection with the transaction, Sanmina has obtained committed financing from Bank of America for $2.5 billion.

This transaction has been unanimously approved by the Sanmina Board of Directors. It is expected to close near the end of the 2025 calendar year, subject to regulatory approvals and customary closing conditions.

Advisors

Foros served as Sanmina's financial advisor. BofA Securities served as Sanmina's financing partner. A&O Shearman served as Sanmina's legal counsel. Joele Frank served as Sanmina's strategic communications advisor.

Conference Call Information

Sanmina will hold a conference call to review today's announcement on Monday, May 19, 2025, at 8:30 a.m. ET (5:30 a.m. PT). The access numbers are: domestic 800-836-8184 and international 646-357-8785. The conference will also be webcast live over the Internet. You can log on to the live webcast at Sanmina IR Events.  Additional information in the form of a slide presentation is available on Sanmina's website at www.sanmina.com. A replay of the conference call will be available for 48-hours. The access numbers are: domestic 888-660-6345 and international 646-517-4150, access code is 37338#.

About Sanmina

Sanmina Corporation, a Fortune 500 company, is a leading integrated manufacturing solutions provider serving the fastest growing segments of the global Electronics Manufacturing Services (EMS) market. Recognized as a technology leader, Sanmina provides end-to-end manufacturing solutions, delivering superior quality and support to Original Equipment Manufacturers (OEMs) primarily in the industrial, medical, defense and aerospace, automotive, communications networks and cloud infrastructure markets. Sanmina has facilities strategically located in key regions throughout the world. More information about the Company is available at www.sanmina.com.

Sanmina's Safe Harbor Statement

The statements contained herein, including those regarding the anticipated benefits of the acquisition of ZT Systems' manufacturing operations, the expected timing and likelihood of closing the transaction, the projected accretion to earnings, operational synergies, future financial performance, and the Company's outlook for growth in fiscal 2025 and beyond, constitute forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on current expectations, estimates, and projections about our industry, management's beliefs, and certain assumptions made by the Company, all of which are subject to change.

Actual results may differ materially from those expressed or implied in these forward-looking statements due to a variety of factors, including but not limited to: the risk that the proposed acquisition may not be completed in a timely manner or at all; the possibility that regulatory approvals required for the transaction may not be obtained or may be obtained subject to conditions that are not anticipated; the risk that the expected benefits, synergies, and accretion from the transaction may not be realized or may take longer to realize than anticipated; adverse changes in the key markets we target, including the cloud and AI infrastructure sectors; the impact of recent or future changes in tariffs and trade policy, which may adversely affect our costs, supply chain, and customer demand; significant uncertainties that can cause our future sales, earnings, and cash flows to be variable; our reliance on a limited number of customers for a substantial portion of our sales; risks arising from our international operations and expansion into new geographic markets; integration risks related to combining ZT Systems' manufacturing operations with our own; geopolitical uncertainty; and other risk factors set forth in the Company's most recent annual and quarterly reports filed with the Securities and Exchange Commission.

The Company undertakes no obligation to (and expressly disclaims any such obligation to) update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Sanmina Contacts

Investors
Paige Melching
SVP, Investor Communications
408-964-3610

Media
Eric Brielmann / Jed Repko / Lyle Weston
Joele Frank, Wilkinson Brimmer Katcher
Sanmina-JF@joelefrank.com
(212) 355-4449

 

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SOURCE Sanmina Corporation

FAQ

What is the total value of Sanmina's acquisition of ZT Systems from AMD?

The total acquisition value is up to $3 billion, consisting of $2.55 billion in cash and equity, plus $450 million in contingent consideration based on financial performance over three years.

How much revenue does ZT Systems' manufacturing business generate annually?

ZT Systems currently generates approximately $5-6 billion in annual net revenue run-rate.

When is the SANM-ZT Systems acquisition expected to close?

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

What manufacturing facilities will Sanmina acquire from ZT Systems?

Sanmina will acquire ZT Systems' manufacturing facilities located in New Jersey, Texas, and the Netherlands.

How will the ZT Systems acquisition impact Sanmina's earnings?

The acquisition is expected to be accretive to Sanmina's non-GAAP EPS in the first year after closing, with further EPS accretion expected as synergies are realized over time.

What is the strategic partnership between Sanmina and AMD after the acquisition?

AMD will retain ZT Systems' AI systems design business and work with Sanmina as their preferred U.S.-based new product introduction (NPI) manufacturing partner for AI rack and cluster-scale systems.