AMD Sells ZT Systems Manufacturing Business to Sanmina-Sci for a Whopping $3B

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.

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.

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