MD Strikes a $3B Deal to Sell ZT Systems’ Server-Manufacturing Business

The Big Deal: What’s Happening?

On May 19, 2025, AMD announced it’s offloading ZT Systems’ server-manufacturing business to Sanmina Corporation in a deal valued at $3 billion. The transaction is a mix of $2.25 billion in cash, a $300 million premium (split 50/50 between cash and equity), and up to $450 million in performance-based payouts over the next three years. This sale comes less than two months after AMD closed its $4.9 billion acquisition of ZT Systems, a key player in AI and cloud infrastructure for hyperscale data centers.

AMD isn’t ditching ZT Systems entirely, though. They’re keeping ZT’s AI system design and customer support teams to bolster their push into AI and cloud computing. Meanwhile, Sanmina, a U.S.-based contract manufacturer, becomes AMD’s “preferred” partner for building AI rack and cluster-scale solutions. Talk about a power move

Why Did AMD Do This?

When AMD snapped up ZT Systems in March, they made it clear they were after ZT’s design expertise to compete with the likes of Nvidia in the AI server market. The server-manufacturing side? Not so much. AMD didn’t want to get into the business of building servers themselves, especially since that could put them in direct competition with big clients like Dell and Hewlett Packard Enterprise. Instead, they decided to spin off the manufacturing arm to focus on high-margin chip design and AI system integration.

By selling to Sanmina, AMD gets to streamline its operations while keeping a strategic partnership. Sanmina’s expertise in manufacturing and ZT’s facilities in New Jersey, Texas, and the Netherlands mean AMD can still tap into top-tier production capacity without owning the factories. Plus, that $3 billion cash infusion doesn’t hurt, especially after the $4.9 billion ZT acquisition. It’s like selling the kitchen but keeping the recipe book—and getting a chef to cook for you.

What’s in It for Sanmina?

Sanmina’s no small fry—they’re a global leader in integrated manufacturing solutions, working with OEMs in industries like cloud, medical, and aerospace. Snagging ZT Systems’ manufacturing business, which has a revenue run-rate of $5–6 billion annually, is a massive win. It boosts Sanmina’s position in the booming AI and cloud markets, giving them access to hyperscale clients like Microsoft and Meta. ZT’s advanced liquid cooling tech and U.S.-based manufacturing also align perfectly with the growing demand for AI servers.

Sanmina’s CEO, Jure Sola, called the acquisition a game-changer, saying it “positions Sanmina as an industry leader in the Cloud and AI ecosystem.” With the deal expected to close by the end of 2025, Sanmina’s ready to ride the AI wave and cash in on the hyperscale computing boom.

The Bigger Picture: AI and Cloud Domination

This deal is all about the AI arms race. AMD’s been gunning to challenge Nvidia’s dominance in the AI server market, and ZT Systems’ design chops are a key weapon. By keeping ZT’s design team, AMD can create tailored AI solutions for cloud giants, while Sanmina handles the heavy lifting of building the hardware. It’s a win-win that lets AMD focus on innovation without getting bogged down in manufacturing.

The timing’s no coincidence either. The data center AI accelerator market is projected to hit $500 billion by 2028, and AMD’s doubling down on its slice of that pie. Posts on X reflect the excitement, with users noting how this move strengthens AMD’s AI infrastructure play while freeing up cash for more strategic investments.

What’s Next?

For AMD, this deal sharpens their focus on AI chip design and system integration, with Sanmina as a trusted manufacturing ally. They’re also making waves elsewhere, like their $10 billion AI compute fund with Saudi Arabia’s HUMAIN and a $6 billion share buyback program. But it’s not all smooth sailing—AMD’s facing headwinds from U.S. export controls on AI chips to China, which could dent margins by $800 million.

For Sanmina, this acquisition cements their role as a heavyweight in AI hardware production. With ZT’s facilities and client roster, they’re poised to capitalize on the AI server surge. And for the tech world? Expect more consolidation and partnerships as companies race to build the infrastructure for the AI revolution.

Wrapping It Up

AMD’s $3 billion sale of ZT Systems’ server-manufacturing business is a masterclass in strategic pruning. By offloading manufacturing to Sanmina and keeping ZT’s design expertise, AMD’s positioning itself as a lean, mean AI machine. Sanmina, meanwhile, gets a golden ticket to the AI hyperscale party. As the AI and cloud markets heat up, this deal’s just one more sign that the tech landscape’s evolving at warp speed. What do you think—smart move by AMD, or are they selling off too much? Drop your thoughts below, and let’s keep the convo rolling!

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