AMD has agreed to divest ZT Systems’ data centre infrastructure manufacturing segment to Sanmina for $3bn in a cash-and-stock deal. The deal also establishes electronics manufacturing services (EMS) provider Sanmina as a preferred partner for new product introduction (NPI) in manufacturing AMD’s cloud rack and cluster-scale AI solutions.
The latest announcement comes around two months after AMD completed its acquisition of ZT Systems for $4.9bn. The semiconductor giant had previously indicated its plans to offload ZT Systems’ server manufacturing business after the formal closure of the acquisition. Despite the divestment, AMD will retain control over ZT Systems’ design and customer enablement teams to improve the deployment quality of its AI systems for cloud customers.
“By combining the deep experience of our AI systems design team with our new preferred NPI partnership with Sanmina, we expect to strengthen our US-based manufacturing capabilities for rack and cluster-scale AI systems and accelerate quality and time-to-market for our cloud customers,” said AMD Data Center Solutions executive vice-president and general manager Forrest Norrod. “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.”
Under the terms of the agreement, Sanmina will pay $2.25bn in cash for assets, along with a $300m premium divided equally between cash and equity. The total consideration also includes a $450m contingent payment based on the business’ financial performance over the next three years.
Sanmina has secured $2.5bn in committed financing from Bank of America to support this acquisition. The transaction is expected to close near the end of 2025, pending regulatory approvals and customary closing conditions.
Deal strengthens Sanmina’s position in cloud and AI end-market
The acquisition of ZT Systems’ manufacturing operations is anticipated to strengthen Sanmina’s presence in the expanding cloud and AI markets. The company expects that the addition will potentially double its revenue within three years.
This transaction will also allow Sanmina to strengthen relationships with existing customers and attract new ones through ZT Systems’ established connections with hyperscalers. The company’s facilities in New Jersey and Texas, equipped with advanced liquid cooling capabilities, will complement Sanmina’s current manufacturing footprint. Additionally, ZT Systems’ Dutch facility offers Sanmina a chance to expand its European presence.
The acquisition is expected to positively impact Sanmina’s non-GAAP earnings per share (EPS) in the first year following the deal’s closure. Further EPS growth is anticipated after synergies are realised.
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