AMD Sells Manufacturing Business for $3B

Sanmina Corp. has entered into a definitive agreement to purchase ZT Systems’ data center infrastructure manufacturing business from semiconductor giant Advanced Micro Devices Inc. for $3 billion. The deal is expected to close by the end of this year.

Foros served as financial advisor for Sanmina, while BofA Securities worked as financing partner, A&O Sherman as legal counsel and Joele Frank as strategic communications advisor. Morgan Stanley was AMD’s financial advisor and Latham & Watkins LLP served as legal advisor.

Zooming in on the acquisition

The transaction includes a mix of cash and stock. Sanmina will pay $2.25 billion in cash for ZT Systems’ assets, a $300 million premium package including a 50 percent cash and 50 percent equity agreement and a $450 million contingent payment based on the next three years’ financial performance of ZT Systems. The buyer secured financing from Bank of America totaling $2.5 billion.

The equity issued by Sanmina to AMD will be subject to a 3-year lock-up period beginning with the time of closing. Equity sales will be limited to 33 percent in the first and second year, with the reminder to trade in the third year.

ZT Systems, up close

The news comes two months after AMD completed the acquisition of ZT Systems. The $4.9 billion cash and stock purchase included a $400 million contingent payment.

Founded in 1994 and headquartered in Secaucus, N.J., ZT Systems is a supplier of hyperscale server solutions for cloud computing and artificial intelligence, with a global footprint spanning the U.S., EMEA and APAC. The company’s holdings include liquid colling and manufacturing facilities in the Netherlands, New Jersey and Texas.

One of its factories is a 435,714-square-foot industrial property in Georgetown, Texas, near Austin. The firm acquired it in late 2023 to serve as a cloud-computing manufacturing site.

An upcoming partnership

Under the current agreement, AMD will retain ZT Systems’ AI systems design operations and work with Sanmina as a U.S.-based new product introduction manufacturing partner. The deal allows AMD to accelerate the time-to-deployment of AI rack and cluster-scale systems.

For Sanmina, the acquisition will strengthen its end-to-end component technology, supply chain solutions and system integration while also accelerating its customers’ at scale deployments of AI systems. The company’s revenue scale is expected to double in the next three years.