Hot Chips, Cool Moves: AMD’s $3B Deal

Snack-Sized Version:

AMD has sold the manufacturing portion of ZT Systems to Sanmina for $3 billion, shortly after acquiring it for $4.9 billion. The deal lets AMD pocket $2.25 billion in cash, with a $300 million premium and a $450 million performance-based cherry on top. This isn’t just spring cleaning—it’s a strategic makeover. By offloading factories and keeping 1,100 system engineers, AMD is ditching hardware headaches to focus on AI-centric design. Sanmina gains not only manufacturing muscle but also ZT’s fancy liquid cooling tech—essential for AI systems that run hotter than summer asphalt. This move underscores the semiconductor trend: ditch physical plants, bet on intellectual property, and lean into strategic manufacturing partnerships. Sanmina gets to ride the AI wave, aiming to double revenue, while AMD gears up to outsmart Nvidia by accelerating product rollouts without the factory baggage. It’s not a breakup—it’s a power couple rebrand.

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Read the Full Meal:

AMD has decided to offload its newly acquired data center manufacturing unit to electronics manufacturer Sanmina in a deal worth $3 billion. The business was part of ZT Systems, which AMD purchased just two months prior for $4.9 billion. But in a savvy pivot, AMD is keeping the intellectual goodies—1,100 engineers and all their hyperscale design brilliance—while Sanmina inherits the soldering irons and server racks.

The transaction includes $2.25 billion in cash, a $300 million premium split between cash and equity, and a potential $450 million contingent on performance. AMD’s strategy here is clear: shed capital-heavy operations and focus instead on high-margin, brainpower-rich design and enablement. That’s the modern semiconductor gospel. If Nvidia is the Goliath with 88% of the GPU market, AMD wants to be the nimble David with cutting-edge AI tools—just without the cost of running a manufacturing floor.

Sanmina, on the other hand, just scored a golden ticket. This acquisition allows it to emerge as a top-tier player in the booming AI manufacturing space. The addition of ZT Systems’ liquid cooling expertise is especially tasty. With AI data centers burning through energy like a kid with a credit card, keeping those chips cool is critical. Sanmina’s CEO isn’t just buying machines—he’s buying heat-defying wizardry.

Perhaps most important, Sanmina is now AMD’s preferred manufacturing partner for AI rack-scale systems. This symbiotic partnership allows AMD to focus on fast-tracking its AI ambitions while Sanmina ramps up production without needing to invent the blueprints. Everyone wins—unless you were hoping AMD would become the next Foxconn.

In the broader scope, this deal highlights a shift across the semiconductor industry. Companies are moving away from running factories and leaning into partnerships, intellectual property, and specialized AI tech. This isn’t outsourcing—it’s a calculated rerouting toward agility and innovation. And in the AI arms race, being nimble beats being heavy.