amd focuses on chip design with $3 billion sanmina deal
san jose, Monday, 19 May 2025.
amd is selling its zt systems’ data center infrastructure manufacturing unit to sanmina for $3 billion. amd will receive cash and stock. sanmina will also become amd’s preferred manufacturing partner for new product introductions. amd will retain zt’s server design and customer enablement teams. this move allows amd to concentrate on its core strength of chip design. the deal is expected to finalize near the end of 2025. this transaction streamlines amd’s operations. it also reduces amd’s capital expenditure.
Deal structure and strategic rationale
Sanmina will pay AMD $3 billion in cash and stock for ZT Systems’ data center infrastructure manufacturing business [3][4]. This sum includes a contingent payment of up to $450 million [4]. Sanmina will also become the preferred new product introduction (NPI) manufacturing partner for AMD’s cloud rack and cluster-scale AI solutions [3]. AMD’s decision to divest the manufacturing unit aligns with its strategy to focus on high-margin chip design and customer-centric solutions [3]. This move is expected to improve AMD’s financial performance by streamlining operations [1].
sanmina’s perspective and market positioning
Sanmina’s acquisition of ZT Systems is viewed as a transformative move. It significantly increases Sanmina’s scale and exposure to the cloud and AI infrastructure market [5]. Jure Sola, Chairman and CEO of Sanmina, stated that the acquisition positions Sanmina as an industry leader in the cloud and AI ecosystem [3][5]. He emphasized that combining Sanmina’s expertise with ZT Systems’ manufacturing capacity would enhance customer relationships and accelerate growth initiatives [3][5]. ZT Systems has manufacturing facilities in New Jersey, Texas, and the Netherlands [3][5].
financial details and analyst expectations
The purchase price consists of $2.55 billion in cash and equity, along with a contingent consideration of $450 million [3]. Sanmina has secured committed financing of $2.5 billion from Bank of America to fund the cash portion of the acquisition [3][5]. Sanmina’s equity issued to AMD will be subject to a three-year lock-up period [3][5]. Equity sales are limited to 33% in the first year, 33% in the second year, and the remaining equity in the third year [3][5]. ZT Systems’ current annual net revenue run-rate is approximately $5 to $6 billion [3][5].
market reaction and forward outlook
AMD’s stock experienced a premarket dip of 2.3% following the announcement [2]. However, analysts suggest the long-term benefits of focusing on core competencies could outweigh the initial negative reaction [alert! ‘specific source needed’]. Forrest Norrod, Executive Vice President and General Manager at AMD, anticipates strengthened U.S.-based manufacturing capabilities and accelerated time-to-market through the partnership with Sanmina [3][5]. The deal is subject to regulatory approvals and customary closing conditions, with an expected closing date near the end of 2025 [3][5].