Advanced Micro Devices (AMD) has agreed to divest ZT Systems’ data centre infrastructure manufacturing business to Sanmina for up to $3bn

The deal positions Sanmina as a preferred partner for the manufacturing of AMD’s cloud rack and cluster-scale AI solutions.

Under the deal terms, Sanmina will take over ZT Systems’ operations for $2.25bn in cash, $300m premium split between cash and equity.

The deal also includes a contingent consideration of $450m based on the financial performance of the business over the next three years.

With the acquisition, Sanmina expects to increase scale and end-market exposure to cloud and ai infrastructure.

It also anticipates bolstering its offering of end-to-end component technology, systems integration, and supply chain solutions.

Sanmina chairman and CEO Jure Sola said: “ZT Systems’ liquid cooling capabilities, high-quality manufacturing capacity and significant cloud and AI infrastructure experience are the perfect complement to Sanmina’s global portfolio, mission-critical technologies and vertical integration capabilities.

“Together, we will be better able to deliver a competitive advantage to our customers with solutions for the entire product lifecycle. We look forward to our ongoing partnership with AMD as we work together to set the standard for quality and flexibility to benefit the entire AI ecosystem.”

Subject to regulatory approval and standard closing conditions, the transaction is scheduled for completion by late 2025.

AMD, however, will maintain ZT Systems’ design and customer support teams.

AMD Data Center Solutions business unit executive vice-president and general manager Forrest Norrod said: “We look forward to working with Sanmina as our preferred NPI manufacturing partner.

“This agreement will help accelerate the US-based manufacturing of AMD AI end-to-end training and inference solutions – which are optimised for our customer’s unique environments, ready-to-deploy at scale and based on our open approach.

“Together, we will accelerate time-to-market and set the standard for quality and flexibility to benefit the entire AI ecosystem.”

Morgan Stanley is advising AMD financially, while Latham & Watkins is providing legal counsel.

The sale follows AMD’s deal to acquire ZT Systems for $4.9bn in 2024, with the intention to sell the server manufacturing business upon completion of the deal.