Last year, AMD Bought ZT Systems in a Surprise Move. The motivation quickly became apparent as AMD needed to move into rack-scale and data center scale infrastructure, not just individual systems and 8 GPU baseboards. ZT Systems both designed and manufactured these systems for hyper-scalers like Microsoft Azure. Along with that $4.9B deal announcement, AMD also noted that it would be selling the ZT Systems manufacturing business. Today, we found Sanmina won the bidding process that drew a lot of industry interest.
Sanmina Buys ZT Systems Manufacturing from AMD
Sanmina is buying the ZT Systems manufacturing business for $2.55B plus a $450M contingent portion for a total of $3B. The business is said to be running at a $5B to $6B annual run rate. That is part of Sanmina’s plan to double revenue over the next few years adding US manufacturing in New Jersey and Texas.
For AMD, it actually started the bidding process and finished the first round of bidding in January as we discussed in the Substack in April when the AMD and ZT Systems transaction closed.
We expected an announcement then that the manufacturing business would be sold in a matter of weeks, and here we are less than two months later with the Sanmina announcement. Just to be clear, there was a lot of interest in acquiring the manufacturing side.
Final Words
For AMD, this was an important step to sell the ZT Systems manufacturing quickly. We heard stories that NVIDIA was not excited about sharing design documentation with ZT Systems after the AMD announcement. Also, while it had the manufacturing business, AMD was competing with many of its customers. AMD did a good job signaling from the outset that it would be quickly divesting of the manufacturing business.
Now, the big question is how will AMD make the remaining investment pay off longer-term.
