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AMD shares dipped about 2% on Monday morning after the company announced that it will divest ZT Systems' U.S.-based data center infrastructure manufacturing operations to Sanmina (NASDAQ:SANM) in a transaction valued at $3 billion in cash and stock.
As part of the deal, Sanmina will become AMD's preferred manufacturing partner for new product introductions involving cloud rack and AI cluster-scale solutions.
The total value of the agreement includes a potential earnout of up to $450 million based on performance targets.
AMD said it will retain ZT Systems' rack-scale AI systems design and customer integration teams to help speed up quality and deployment timelines for hyperscale clients.
The transaction is expected to close near the end of 2025, subject to regulatory approvals and closing conditions.
The move follows AMD's plan, first outlined in August 2024, to find a strategic partner to take over the manufacturing side of ZT Systems' infrastructure unit following its acquisition.
This article first appeared on GuruFocus.