AMD Sells ZT Systems Manufacturing Arm to Sanmina for $3 Billion

AMD (NASDAQ:AMD) has announced the sale of ZT Systems' manufacturing operations to Sanmina Corporation (NASDAQ:SANM) in a $3 billion deal. The transaction includes $2.55 billion in cash and equity, along with up to $450 million in potential earnouts over three years.

This strategic divestment comes less than a year after AMD acquired ZT Systems for $4.6 billion. From the beginning, AMD made it clear that its primary interest was not the manufacturing segment, but ZT’s engineering expertise. By retaining ZT’s 1,200-person engineering team—valued internally at $1.6 billion or roughly $1.33 million per engineer—AMD aims to strengthen its data center GPU capabilities and better compete with Nvidia (NASDAQ:NVDA).

Citi analysts noted that while the sale price falls below initial expectations of around $5 billion or 1.0X trailing sales, it aligns with the low-margin nature of system manufacturing. For comparison, Supermicro trades at a higher 1.2X sales multiple. Still, the retained engineering talent is viewed as a long-term strategic asset for AMD in the hyperscale and AI-driven data center market.

Sanmina is paying $2.25 billion in cash and a $300 million premium split evenly between cash and stock. The deal also includes a $153 million breakup fee payable to AMD if the transaction is not completed.

Analysts believe the deal will sharpen AMD’s focus and enhance its execution speed in deploying data center solutions. The acquisition of ZT’s engineering team is expected to help AMD accelerate hyperscaler adoption and compete more effectively in the growing AI GPU space.