Advanced Micro Devices (AMD) and Sanmina-Sci (SANM) are in the news Monday after the two companies agreed to a deal for the former’s ZT Systems manufacturing business. Sanmina will pay $3 billion for the ZT Systems operations, including $2.25 billion in cash, a $300 million premium split 50/50 between cash and equity, and $450 million contingent on financial performance over the next three years.
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Sanmina’s acquisition of ZT Systems manufacturing business gives it access to the world’s largest hyperscalers through its Cloud and AI infrastructure operations. It will also strengthen the company’s position as a vertically integrated global manufacturing solutions provider with its annual net revenue run-rate of $5 billion to $6 billion. Sanmina also notes the outlook for this is good as demand for artificial intelligence (AI) servers increase.
AMD & Sanmina-Sci Announce a Partnership
AMD and Sanmina also announced a new strategic partnership as part of the ZT Systems deal. AMD will retain the AI systems design business of ZT Systems and work with Sanmina as a new product introduction manufacturing partner in the U.S. This will improve the quality and time-to-deployment of AMD AI rack and cluster-scale systems for cloud customers.
AMD Executive Vice President and General Manager of Data Center Solutions Forrest Norrod said, “Together, we will accelerate time-to-market and set the standard for quality and flexibility to benefit the entire AI ecosystem.”
AMD stock slipped 1.85% in pre-market trading on Monday, while shares of SANM stock were down 3.04% at the same time.
AMD vs. SANM Stock: What Investors Need to Know
Comparing AMD and SANM, the former has better investment potential, according to analysts. That includes a consensus Moderate Buy rating and $126.55 average price target representing a possible 8.01% upside, compared to SANM’s Hold rating and $87 average price target, with a potential 2.89% upside.
