Manufacturing services provider Sanmina has agreed to acquire the server-manufacturing unit of ZT Systems, the data centre server maker that AMD acquired in a recently closed deal, for up to $3 billion (£2.3bn), the companies said.

Sanmina is to pay $2.25bn in cash as well as $300m split evenly between cash and equity.

The deal, which is expected to close late this year, includes a $450m contingent consideration based on the business’ financial performance over the next three years.

US-based manufacturing

The sale is designed to turn San Jose, California-based Sanmina into a US-based manufacturing partner for AMD, as the chip company works to bring more of its supply chain within US borders.

Forrest Norrod, executive vice president of AMD’s data centre solutions business unit, said the deal would strengthen the company’s US-based manufacturing capabilities for rack and cluster-scale AI systems.

AMD said last month that its flagship processing chips would be made at TSMC’s new production site in Arizona, the first time its products have been manufactured in the US.

The company announced its $4.9bn takeover bid for ZT Systems last year and said it would sell the server manufacturing business once the deal was concluded. The acquisition was completed in March.

AMD retains ZT’s systems design business, a critical unit at a time when customers are seeking highly complex cloud-based AI computing systems.

The chipmaker is Nvidia’s biggest competitor in the AI accelerator market, but controls only 17 percent of the market compared to more than 80 percent for Nvidia, according to recent figures.

Secaucus, New Jersey-based ZT Systems is to become part of AMD’s Data Center Solutions Business Group, AMD said at the time the acquisition last August.

‘Transformational’

“AI is the most transformational technology of the last 50 years and our No. 1 strategic priority,” said AMD chief executive Lisa Su at the time.

She said the acquisition would help AMD’s largest customers deploy its AI infrastructure more rapidly.

ZT’s engineers “understand the challenges of designing and managing high-performance and high-density systems at a massive scale”, Su said.

She said that after selling the manufacturing unit AMD would retain about 1,000 engineers, giving it an edge in quickly testing and rolling out systems based on its AI graphics processing chips on a large scale for cloud customers.

AMD chief financial officer Jean Hu said the deal would pay for itself by the end of 2025 by facilitating more GPU sales, and would accelerate revenue growth in 2026.