How AMD’s $3 billion deal with Sanmina positions it for the future of AI and domestic supply chains

AMD has taken a major step in reshaping its hardware production strategy by agreeing to sell the server-manufacturing business of ZT Systems to Sanmina in a $3 billion deal. This strategic move underscores AMD’s commitment to onshoring critical supply chains amid growing geopolitical tensions and the urgent need for domestic semiconductor production. 

By partnering with Sanmina, a leading U.S.-based contract manufacturer, AMD aims to focus more on AI systems design while leveraging Sanmina’s manufacturing expertise. Experts from Bitnixer, led by lead trading agent Bryan Novak, analyze the deal’s details and explore its potential impact on AMD’s position in the highly competitive AI hardware market and broader semiconductor industry.

A $3 Billion Deal Amid a Changing Supply Chain Landscape

AMD acquired ZT Systems for $4.9 billion in 2024, aiming to deepen its capabilities in AI hardware design and manufacturing. However, AMD announced plans to divest ZT’s server manufacturing operations shortly after closing the acquisition in March 2025. The agreement with Sanmina involves:

• $2.25 billion in cash for the manufacturing business
• An additional $300 million premium split equally between cash and equity
• Up to $450 million contingent consideration tied to performance over three years
• A termination fee of up to $153 million payable to AMD if the deal falls through

This deal signals a strategic focus on leveraging partners to handle manufacturing, while AMD retains the AI systems design business — a critical asset for competing in the AI chip space.

Strengthening U.S.-Based Manufacturing

Global trade tensions and government initiatives to boost domestic semiconductor production have put onshoring at the forefront for tech giants. AMD’s move aligns with these priorities:

• Its key central processor chips will soon be produced at TSMC’s Arizona facility, marking the first time AMD’s products are manufactured on U.S. soil.
  
• AMD executive VP Forrest Norrod emphasized the deal’s role in accelerating quality and time-to-market for cloud customers, particularly for rack and cluster-scale AI systems.

The partnership with Sanmina, a major U.S.-based contract manufacturer, enhances AMD’s ability to deliver AI hardware from trusted domestic sources, reducing supply chain risks.

Focus on AI Systems Design

While AMD sells ZT’s manufacturing arm, it holds onto the AI systems design business, which maps out complex clusters of thousands of chips required for modern AI workloads. This design expertise is a core part of AMD’s competitive strategy as it challenges rival Nvidia in AI processors.

This division could become a valuable portfolio piece for AMD, allowing the company to innovate on AI architecture without the overhead of direct manufacturing. It shows a deliberate shift towards specialization and strategic partnerships.

Market Reactions and Industry Context

Following the announcement, AMD shares dropped around 2.2%, and Sanmina’s stock declined more than 5%. This reaction reflects investor caution amid the transition and uncertainties about integration and operational shifts.

Still, the deal occurs at a pivotal moment. The semiconductor industry is under pressure to:

• Expand domestic chip production
• Address supply chain vulnerabilities revealed by geopolitical tensions
• Meet surging demand for AI and cloud infrastructure hardware

AMD’s move fits into these trends, positioning the company for future growth by focusing on design leadership and partnering for manufacturing scale.

What Investors Should Watch

Several key developments will be important to monitor as this transaction unfolds. First, the deal closing timeline, expected near the end of 2025, will be crucial. Any delays or regulatory hurdles could affect market sentiment and operational plans. 

Once the deal is complete, investors should carefully observe the performance of the ZT manufacturing business under Sanmina’s management. How effectively Sanmina integrates and operates this unit will impact both companies’ long-term outlooks.

Meanwhile, AMD’s ability to ramp up chip production at TSMC’s Arizona facility will be a significant indicator of its success in strengthening U.S.-based manufacturing capabilities. Meeting production targets at this plant will reduce supply risks and improve delivery timelines for AI hardware.

Investors should also keep an eye on competitive moves by Nvidia and other AI chipmakers, as AMD faces intense rivalry in this space. Finally, AMD’s progress in AI systems design and cluster solutions innovation will reflect its capacity to maintain leadership amid rapid technological change.

Lead trading agent Bryan Novak from Bitnixer emphasizes that this deal signals AMD’s strategic shift toward focusing on core strengths and leveraging partnerships for growth in AI technology.

Final Perspective: Specialization Over Expansion

AMD’s sale of ZT’s manufacturing arm highlights a broader shift in the semiconductor industry towards specialization and collaboration. By offloading manufacturing to Sanmina while concentrating on AI design and architecture, AMD aims to stay agile and competitive in a market defined by rapid innovation and complex supply dynamics.

This deal offers investors a glimpse of how tech companies balance growth ambitions with practical supply chain realities, focusing on core strengths and relying on partnerships for scale and resilience.