AMD Completes ZT Systems Manufacturing Divestiture to Sanmina in Strategic AI Infrastructure Partnership

This analysis is based on the official announcement from AMD [1] published on October 27, 2025, regarding the completion of the ZT Systems data center infrastructure manufacturing business divestiture to Sanmina Corporation for approximately $3 billion [1][3]. This strategic transaction represents the final phase of AMD’s $4.9 billion ZT Systems acquisition initially announced in August 2024 [5], implementing an asset-light strategy that retains high-value design and customer enablement expertise while transferring manufacturing operations to Sanmina [1][2].

AMD’s divestiture strategy demonstrates a sophisticated approach to capital allocation in the AI infrastructure sector. By retaining ZT Systems’ world-class design and customer enablement teams while transferring manufacturing operations to Sanmina, AMD creates an asset-light model focused on its core competencies in silicon design and software [1][2]. This strategic partnership positions Sanmina as AMD’s preferred new product introduction (NPI) manufacturing partner for cloud rack and cluster-scale AI solutions, ensuring manufacturing capacity without operational complexity [1][2].

The transaction occurs within a hyperscale data center market experiencing unprecedented growth, projected to expand from $122.02 billion in 2025 to $246.62 billion by 2029, representing a 19.2% CAGR [8]. Major cloud providers are expected to spend over $150 billion on data center infrastructure in 2025 alone [7], creating significant opportunities for both companies.

For Sanmina, this acquisition represents a transformational opportunity that significantly enhances its competitive position in the Electronics Manufacturing Services (EMS) market, where it currently holds 2.78-6.10% market share [9][10]. The addition of ZT Systems’ state-of-the-art manufacturing facilities in New Jersey, Texas, and the Netherlands provides Sanmina with advanced liquid cooling technologies and high-power infrastructure capabilities critical for AI workloads [2].

The acquisition positions Sanmina to better compete with EMS leaders like Foxconn (35-40% market share), Pegatron (15-20%), Jabil (12-16%), and Flex (10-14%) [9], particularly in the lucrative data center and AI infrastructure segments. The global EMS market is projected to reach $130.53 billion in 2025, growing at a 6.9% CAGR through 2032 [10].

The transaction accelerates several key industry trends in AI infrastructure:

• Rack-scale innovation
  : Transition from component-level to system-level solutions [1]
• Advanced cooling requirements
  : Liquid cooling adoption growing at 142% between 2025-2030 [6]
• Power density challenges
  : Infrastructure requirements exceeding traditional data center capabilities [7]
• Supply chain localization
  : U.S.-based manufacturing gaining strategic importance [2]

The AMD-Sanmina partnership creates unique synergies across design, manufacturing, and customer relationships. AMD retains control over intellectual property and customer-facing activities while leveraging Sanmina’s manufacturing expertise and scale [1][2]. This model allows both companies to focus on their core competencies while maintaining end-to-end capability for hyperscale customers.

The divestiture reflects broader industry trends toward specialization and strategic partnerships in the semiconductor ecosystem. Similar to NVIDIA’s end-to-end “AI factory” approach [5], companies are choosing between full-stack solutions and specialized partnerships based on their strategic priorities and capital allocation strategies.

The partnership enhances supply chain resilience for cloud customers by combining AMD’s design leadership with Sanmina’s manufacturing scale and geographic diversification. With record-low data center vacancy rates (1.6% in H1 2025) despite record supply additions [7], accelerated deployment capabilities become increasingly valuable.

1. Integration challenges
   : Successfully combining ZT Systems operations with Sanmina’s existing footprint requires careful execution [2]
2. Technology transition risk
   : Rapid evolution of AI infrastructure requirements may demand continuous capability upgrades
3. Competitive response
   : Potential counter-moves by other major players in the ecosystem could impact market dynamics
4. Supply chain complexity
   : Managing global supply chains for advanced components and materials presents ongoing challenges

1. Market leadership
   : Combined capabilities position the partnership for leadership in the rapidly growing AI infrastructure market
2. Customer acceleration
   : Strategic partnership aims to reduce time-to-market for AI infrastructure deployments [1][2]
3. Technology advancement
   : Access to advanced manufacturing capabilities supports innovation in liquid cooling and high-density solutions
4. Geographic expansion
   : U.S.-based manufacturing facilities support supply chain localization trends

The AMD-Sanmina transaction represents a significant milestone in AI infrastructure supply chain evolution, potentially serving as a model for future industry restructurings. The $3 billion divestiture [1][3] allows AMD to implement an asset-light strategy while maintaining strategic control over design and customer relationships. For Sanmina, the acquisition provides transformational growth opportunities in the high-margin AI infrastructure segment [2].

The partnership addresses critical market needs including accelerated deployment times, advanced cooling technologies, and supply chain resilience for hyperscale customers. As the hyperscale data center market continues its rapid expansion toward $246.62 billion by 2029 [8], this strategic positioning should enable both companies to capture significant growth opportunities while maintaining focus on their respective core competencies.

The transaction reflects broader industry trends toward specialization, strategic partnerships, and supply chain localization in response to AI-driven infrastructure demands. Success will depend on effective integration execution and continued innovation in rapidly evolving technology requirements.