AMD's latest divestment is attracting quite a lot of eyeballs on Wall Street, especially as the transaction will serve to enrich the chipmaker's proverbial coffers, while allowing for a more nimble and lean operational structure, where AMD will design its rack-scale solutions in-house and then outsource their manufacturing to Sanmina.
As we detailed in a recent post, Sanmina will pay AMD $2.25 billion in cash, and a $300 million premium equally divided between cash and equity ($150 million each). Additionally, Sanmina will also make a contingent payment of $450 million to the chipmaker, based on the financial performance of the acquired assets over the next three years. This transaction is expected to achieve closure by the end of 2025.
Now, Citi has added some additional color by delving into the minutiae of the definitive agreement between AMD and Sanmina. As such, AMD stands to gain $3 billion from the divestment of ZT Systems' data center infrastructure and manufacturing business to Sanmina. However, Citi analyst Christopher Danely points out that AMD had recently acquired the entirety of ZT Systems for $4.6 billion. This means that AMD is valuing ZT's residual assets, which primarily consist of a team of around 1,200 engineers, at $1.6 billion. This equates to a valuation of around $1.33 million per engineer.
Meanwhile, Wells Fargo analyst Aaron Rakers thinks that AMD is increasingly pivoting towards its upcoming rack-scale offerings to drive the next phase of growth.
The MI400 series of GPUs, expected to debut in 2026, currently personify AMD's rack-scale ambitions. Rakers quotes recent industry reports to suggest that the MI450 IF128 cluster will consist of "128x GPU packages communicating at >1.8TB/s unidirectional bandwidth per GPU."
Of course, we'll likely hear more about AMD's rack-scale strategy at its upcoming AI event in June.
Finally, we note that AMD is also working with HUMAIN, the AI-focused subsidiary of the Saudi Public Investment Fund (PIF), to deploy 500 megawatts of AI compute capacity in Saudi Arabia over the next five years.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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