SAN JOSE: Advanced Micro Devices Inc. (AMD) is selling the server manufacturing business of recently acquired ZT Systems to Sanmina Corp. in a deal worth up to $3 billion, as the chipmaker shifts focus to U.S.-based production of artificial intelligence hardware.
The agreement, announced Monday, underscores AMD’s push to onshore more of its supply chain amid rising global trade tensions and Washington’s broader efforts to revive domestic semiconductor manufacturing.
Under the terms, Sanmina will pay $2.25 billion in cash for ZT’s manufacturing operations, plus a $300 million premium split evenly between cash and equity. An additional $450 million is tied to the unit’s financial performance over the next three years. If the deal falls through, AMD could receive up to $153 million in termination fees.
AMD will retain ZT’s AI systems design division—a strategic asset as demand surges for complex computing systems that link thousands of chips. The move could help AMD better compete with rival Nvidia in the high-stakes AI processor market.
“This strengthens our U.S.-based manufacturing for AI systems and accelerates delivery for cloud customers,” said Forrest Norrod, head of AMD’s data center solutions unit.
The sale follows AMD’s $4.9 billion acquisition of ZT Systems in 2024, which closed in March. Last month, AMD also announced its flagship central processors would soon be made at Taiwan Semiconductor Manufacturing Co.’s new Arizona plant—marking its first U.S. production.
Investors reacted cautiously, with AMD shares dipping 2.2% and Sanmina falling more than 5% on Monday. The transaction is expected to finalize by late 2024.
The deal highlights the semiconductor industry’s broader realignment as companies navigate geopolitical risks and U.S. incentives for local chipmaking. AMD’s pivot could position it to capitalize on federal subsidies under the CHIPS Act while securing its AI supply chain.