AMD to sell ZT Systems' server-manufacturing business to Sanmina in $3 billion deal

AMD has agreed to sell the server-manufacturing business of recently acquired ZT Systems to Sanmina in a $3 billion deal, making the contract manufacturer its partner for building AI systems as the chipmaker works to onshore supply chains.

AMD had announced a $4.9 billion buyout of ZT Systems last year and unveiled plans to break off its server manufacturing business and sell it once the transaction closes. The deal was completed in March.

Under the agreement announced on Monday, AMD will retain ZT's AI systems design businesses and will work with Sanmina as a US-based manufacturing partner for its AI data center business. Shares of AMD were down 2.7% in premarket trading.


"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," Forrest Norrod, executive vice president of AMD's data center solutions business unit, said in a statement.

AMD has already taken steps to produce more of its chips on American soil amid global trade tensions and US President Donald Trump's efforts to expand domestic semiconductor manufacturing.

The company had said last month its key processor chips would soon be made at TSMC's new production site in Arizona - the first time its products will be manufactured in the United States.

Sanmina will pay $2.25 billion in cash for ZT Systems' data center infrastructure manufacturing business, along with $300 million premium consisting of 50% cash and 50% equity.

The deal, expected to close near the end of this year, also includes a $450 million contingent consideration based on financial performance of the business over the next three years.